Glencore in Talks to Back Eramet’s Lithium Project in Argentina, Securing Future Supply

Glencore Plc, a prominent commodity trader, is currently engaged in advanced negotiations to support a lithium project in Argentina led by French mining company Eramet SA. According to insiders familiar with the matter, Glencore will enter into an offtake agreement with Eramet, offering financial assistance for the construction of the lithium processing plant in collaboration with China's Tsingshan Holding Group Co. As demand for lithium surges due to the electric vehicle revolution, the project aims to address the anticipated supply shortage in the coming years. Glencore, which is looking to expand its presence in the lithium market, has not disclosed the exact investment amount or the quantity of lithium it will secure through the offtake agreement.

While Glencore does not currently mine lithium, it does produce the material through its recycling operations. The company has been actively pursuing opportunities in lithium trading and established a dedicated desk with a team of traders last year, signaling its strategic interest in the sector.

This development aligns with the growing trend among automakers, including Ford Motor Co. and General Motors Co., who are actively seeking direct partnerships with miners to secure future lithium supplies. This represents a departure from the traditional approach of procuring automotive components or entering into fixed-price, long-term contracts for raw materials.

The joint venture between Eramet and Tsingshan involves the construction of a lithium processing plant with a projected annual capacity of 24,000 tons. The plant, set to commence production in the second quarter of 2024, is estimated to cost over €700 million ($763 million). Both companies are also considering expanding the plant's capacity significantly, with a final decision expected later this year.

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