Transnational Lithium Occupation in Argentina

By Betzabeth Aldana Vivas  –  Jun 19, 2023

“Argentina has produced its first lower than battery-quality lithium carbonate as part of commissioning.” This information was recently published by the Canadian transnational Lithium Americas to announce one of the largest lithium production projects in Argentina. It is the Caucharí-Olaroz project.

This mine of two salt flats is in the Jujuy province of northeast Argentina, within what is known as the Lithium Triangle (or ABC Triangle) in Latin America.

As a commercial attraction, Caucharí-Olaroz is expected to become one of the world’s lowest-cost lithium brine extraction projects. This issue attracts attention because Jujuy is an arid area, and vast amounts of water would be required to carry out the mineral extraction process, making it more costly.

It is expected that 40,000 tons of lithium can be produced annually, achieving a lower quality purification to obtain lithium carbonate. In the second half of this year, it is projected to improve that quality. It seems to be encouraging news for Argentina, but this project is in foreign hands.

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Transnational corporations
Currently, lithium production in Argentina is carried out in two projects: the Salar del Hombre Muerto, by US company Livent Corp, and the aforementioned project in Jujuy.

Caucharí-Olaroz has an investment of over $900 million and a mining durability range of 40 years. The Argentinian company Minera Exar manages the operations. However, the company has foreign owners distributed in a tripartite way: Lithium Americas and the Chinese company Gangfeng Lithium have almost 50% participation each, and Jujuy Energía y Minería Sociedad del Estado (JEMSE) with only 8% of the shares.

While Lithium Americas and Gangfeng Lithium became partners in this dynamic of lithium extraction and processing in Argentina in 2017, the Canadian company announced a new entity to operate in Argentina, Lithium Argentina, separating itself somewhat from the Chinese partner and focusing on its project in the United States. In short, the company announced its intention to set aside the business in Argentina.

This move is no coincidence. It comes as the Canadian government ordered three Chinese companies to divest their investments from Canadian mining companies, allegedly for “national security” reasons, to protect their supply chains. In response, Chinese Foreign Ministry spokesman Zhao Lijian said the divestment order violated international trade and market rules.

In March, Lithium Americas CEO Jonathan Evans previewed his company’s “new” vision, explaining that he hoped to shorten lithium processing paths because lithium can travel a long way from mine to finished product. “If you look at the path where today of where lithium travels from either South America or Australia to China… it’s a very long path, and they’re exposed supply chains, especially given the kind of geopolitical environment we’re in now… supply chains can get impacted quickly with these exogenous situations.”

This change of rules in the transnational mining game shows clear signs of the new “Hunger Games” for control of the lithium market. Canada, as a loyal partner of the United States, has cracked down on Chinese investment in mining as they push to compete with Beijing for access to lithium.

On the other hand, Lithium Americas is not the only Canadian company operating in Argentina. Alpha Lithium is also present. However, the leader in lithium carbonate production in Argentina is the US company Livent Corp, which has just merged with Allkem, an Australian company, to expand the range of production in Argentinian salt flats.

Foreign companies are readjusting their handpieces to obtain greater advantages and benefits in the lithium business, where state participation is not very noticeable.

Controlling lithium
Several international mining companies are active in Argentina, operating at various stages in the lithium production cycle. There are no restrictions on foreign investment and the operation of companies dedicated to the exploration and extraction of the precious mineral. These large businesses note that there is no legal uncertainty in Argentina that could imply risks for their investments.

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The root of the current state of foreign participation in lithium companies comes from Carlos Menem’s government (1989-1999), characterized by promoting monetary policies of privatization and accompaniment of the International Monetary Fund (IMF) that unleashed one of the strongest economic crises in Argentina.

Menem’s top officials granted facilities. His former Minister of the Interior, José Luis Manzano, is currently the owner of the private company Integra Lithium, which owns many hectares of lithium salt flats in Catamarca and Jujuy. Last April, Manzano presented himself to investors as “the main local lithium player.”

Menem established that foreign companies could invest without obstacles and with total openness through Law 24.196 on “Mining Investments,” allowing transnational companies to settle in the Argentinian salt flats without any problem. Martina Gamba, a researcher at the Faculty of Exact Sciences of the National University of La Plata and co-author of the book Lithium in South America, explains that in Argentina, “under the current legislation, exploration, extraction and commercialization is almost entirely in the hands of private transnationals, without the state having any kind of policy or participation in the value chain of any lithium derivative.”

In 2011, amid Kirchnerism, Jujuy’s lithium was officially considered a strategic natural resource. In the aforementioned book, Gamba argues that “Article 124 of the National Constitution, the Mining Code, and the Mining Investment Law is a real legal-tributary triad that prevents the development and planning of policies around the exploitation of lithium that genuinely grant it a strategic character.”

To better illustrate the scenario, Martín Obaya, director of the University of San Martin’s Center of Studies for Transformation, explains that there is a regulatory framework for mining where foreign companies are “granted a lot of benefits and the provinces, which are the owners of the resources, cannot charge royalties of more than 3%.” The lithium extracted does not create a significant income for the Argentinian State.

Thus, Argentina has an undoubted allure for lithium transnationals, especially in the coming years of increasing demand for this resource.

However, Argentina has a long way to go to realize the real benefits of lithium production. With changes in the legal corpus, it could formulate the necessary public policies for the mineral to be classified as strategic at the national level, and the Argentinian State could obtain a due royalty. All the more so if we consider that projections for 2025 estimate Argentinian lithium exports to reach $5.6 billion.

 

(Misión Verdad)

Translation: Orinoco Tribune

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