SALTA, June 14, 2025 (AP) — Tesla signed supply agreements Wednesday to purchase $2.1 billion in battery-grade lithium carbonate from Argentine producers over five years, the largest mining supply contract in the country's history.
The agreements cover supplies from three producers: Livent Corporation in Catamarca, Allkem's Cauchari-Olaroz project in Jujuy, and a state-backed venture in Salta Province. Deliveries begin January 2026 at $14,500 per tonne.
President Milei attended the signing ceremony at the Salta provincial government palace. "Argentina has the lithium the world needs," Milei said. "The era of begging for investment is over."
Tesla's head of powertrain and energy engineering, Drew Baglino, said the company conducted independent hydrological audits before finalizing terms. "We need predictable, long-term supply to support our 2030 production targets, and Argentina has the geology," Baglino said.
Argentina holds the world's third-largest lithium reserves, estimated at approximately 22 million tonnes of lithium carbonate equivalent, concentrated in high-altitude salt flats across the country's northwestern provinces.
Water usage has emerged as the most contested aspect of lithium expansion in the Puna highlands, the arid plateau where all three supply projects operate. Extracting lithium from salt brine requires evaporating vast quantities of groundwater pumped from beneath the flats. Local communities in Catamarca have staged repeated protests against Livent's expansion permits, arguing that government environmental impact studies underestimate cumulative water draw across multiple simultaneous projects.
At $14,500 per tonne, Tesla has locked in rates well below the 2022 lithium price spike that saw carbonate prices exceed $80,000, but above current depressed market levels near $11,000.
The contract also positions Argentina within Tesla's broader supply diversification strategy. The automaker currently sources the majority of its lithium from Australia and Chile, but has steadily increased its exposure to Argentine projects as Australian spodumene concentrate faces processing bottlenecks.
Mining analysts note that Argentine lithium projects carry political risk that Australian hard-rock mines do not, given that every project in the Puna depends on provincial permitting and provincial politics can turn volatile.
The deal intensifies competition among battery manufacturers for Argentine lithium. Chinese battery giant CATL signed a separate supply agreement with Jujuy Province in April, and South Korea's LG Chem has held preliminary discussions with Salta officials. The rush to secure long-term supply contracts reflects industry projections that global lithium demand will triple by 2030 as electric vehicle adoption accelerates in Europe and Asia.
For Argentina's northwestern provinces, the lithium boom represents both an opportunity and a challenge. Catamarca, Jujuy, and Salta are among the country's poorest provinces, with limited economic diversification beyond agriculture and mining. The provincial governments have established sovereign wealth funds to capture royalty revenue, but critics question whether the funds will be managed transparently.
