Lithium: production in Argentina and Bolivia needs foreign investment to ramp up
In Argentina, in an unstable political and economic context, the government is betting big on this white gold which could help redress the situation. However, investors are still waiting for the country to stabilize to be reassured. As for Bolivia, which has the largest lithium resources in the world, the desire to exploit this metal in a sovereign manner has been disappointed and the government is changing strategy.
In Argentina, the arguments for attracting investors are based primarily on the enormous potential of its natural resources. Argentina has 20% of the world’s reserves with 3 million tonnes of lithium. Current deposits are found in the northwest of the country. This is where lithium is mined and then exported mainly to Asia, the United States or Canada. Furthermore, costs are relatively low due to the evaporative extraction method. A much cheaper method than the traditional method of rock extraction as in Australia for example.
For Javier Milei, we must not stick to the extraction of raw materials, but move towards industrialization, with the manufacturing of components or batteries to generate added value. But for that you need money. This is why Milei is making more trips abroad to meet with potential interested parties. The best example would be Elon Musk, the multibillionaire owner of Tesla, one of the leaders in the construction of electric cars, with whom Milei met in Texas last April.
To offer investors favorable conditions, the government tabled an economic deregulation bill, called the “Bases Law”, which includes a special chapter on investments of more than 200 million dollars. The text notably proposes a reduction in income taxes, greater freedom of imports and the end of monetary control on investment. The project has already been approved by deputies and must be debated next week in the Senate.
Resistance to lithium exploitation and production projects comes mainly from environmentalists. In the north of the country, for example, the courts have just suspended mining activity for non-compliance with environmental standards. To extract the lithium, a dam was built, generating drought in the area, which affects the inhabitants and the ecosystem. Investors, for their part, are cautious firstly, because of the lack of infrastructure in the northwest of the country and because despite the efforts of the ultraliberal president to transmit to the world a message of future economic prosperity, the results of its economic plan remains uncertain. Argentina is a country today that offers neither predictability, nor competitiveness, nor fiscal stability.
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