Oct. 9 (Bloomberg) -- Argentina expects to become one of the world’s five biggest producers of lithium by 2011, Mining Secretary Jorge Mayoral said.

“Lithium production in Argentina will increase 10-fold from the 3,600 metric tons today to around 38,000 metric tons once the Olaroz mine opens and will make Argentina the fourth or fifth producer in the world,” Mayoral said yesterday in an interview in his Buenos Aires office.

The increase in lithium production will be marked by the opening of a mine in the northwestern province of Jujuy in late 2010 or early 2011, he said.

Orocobre Ltd.’s plans to start building the $104 million Olaroz mine were announced on Sept. 23 by the Mining Secretariat. Australia’s Orocobre will mine lithium from salt flats in Argentina’s northwest Jujuy province. Lithium carbonate is used in batteries to power electrical appliances.

A potash project by Brazil’s Vale SA, in the western province of Mendoza, is also under way, Mayoral said. Vale’s development will give Argentina the world’s biggest potash field when it is completed. Potash is a raw material used to make fertilizers and glass.

“Vale has several projects in Argentina, including salt fields, but lately is has focused on the Rio Colorado project because of its sheer size,” Mayoral said. “The deposit has reserves of more than 100 million tons and will become the world’s largest potash commercial enterprise.”

Environmental Permits

In August, Vale’s project received required permits from the provincial environmental regulator.

“Obtaining these permits can be considered the last major regulatory hurdle prior to starting construction of the mine, so it is a landmark,” Mayoral said. “We are of the understanding that Vale’s board will meet in late October to decide on the size of the investment.”

Vale bought the Rio Colorado operation in Argentina and also exploration ground in Canada from Rio Tinto Group in January for $850 million.

To contact the reporter on this story: Rodrigo Orihuela in Buenos Aires at rorihuela@bloomberg.net.

Last Updated: October 9, 2009 16:23 EDT