Argentine Provinces Reject Lawmakers’ Proposals to Nationalize Lithium Resources

Buenos Aires — The Argentine state’s ownership of the country’s lithium resources is a debate that is now taking place, amid the growth of the sector and the policies of neighboring countries such as Chile, which have seen the government propose plans to wrest control over mining projects.

After legislative initiatives to nationalize the so-called ‘white gold’, Argentina’s provinces are insisting on “the need for clear rules and to respect the national Constitution”, a demand echoed by companies operating in the lithium mining sector.

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Eleven lawmakers of the ruling Frente de Todos coalition presented this month a project to declare lithium as a strategic resource, and for Argentine state to have “the first option to acquire the lithium extracted in our country”.

• Akey fact: Argentina’s lithium industry, whose exports totaled around $700 million last year, hired 1,492 new workers in 2022, according to the government.

The project was presented by Juan Carlos Alderete, from the Corriente Clasista y Combativa (CCC) faction. However, the proposal is supported by legislators closer to Vice President Cristina Fernández de Kirchner, who in recent days called for a discussion regarding this critical mineral: Sergio Palazzo and Leopoldo Moreau.

With the announcement of the proposal, the country’s provinces’ council, which advises the Mining Ministry, expressed its rejection of the initiative and demanded that “clear rules” for the development of the industry be drawn up. The Federal Mining Council (COFEMIN) is chaired by Miguel Soler, Secretary of Mining and Hydrocarbons of Jujuy, one of the three provinces that make up the country’s so-called lithium hub, together with the provinces of Catamarca and Salta.

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What does the bill propose?

The main points of the bill presented by Alderete in the Chamber of Deputies are as follows

• Article 1: “Mineral reserves containing lithium are declared as a strategic natural resource for the socio-economic and industrial development of the Argentine Republic”.
• Article 4: The concessions already granted for lithium extraction constituted in favor of private companies prior to the effective date of this law, are fully covered by this law and shall be subject to its provisions and the rules that regulate it within one year as from its enactment.
• Article 5: The State shall have the first option to acquire the lithium extracted in our country. In order not to exercise its right of preference, the State shall have to expressly decline the right of preference by notifying the province that owns the resource in an irrefutable manner.
• Article 7: The Executive Power may limit or prohibit the import or export of lithium and its derivatives when, in urgent cases, reasons of public interest so advise, and shall inform Congress in a timely manner.

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What does COFEMIN say?

Argentina’s Federal Mining Council (COFEMIN), made up of the country’s provincial and federal governments, aims “to actively participate in the design, execution and follow-up of the national mining policy”, according to its mission statement, issued a statement on May 12 in rejection of the draft bill.

“From COFEMIN, we see that there are recurring issues that continue to be raised for debate in Congress, and which generate uncertainties for mining investments, harming the Argentine people”, the council said in thr statement, referring to the bills on “the nationalization of lithium and other natural resources” that have recently entered Congress, and which will again spawn a debate on a proposal that has already been rejected for going against the Argentine Constitution”.

• Article 124 of the Argentine Constitution grants the provinces ownership of the natural resources existing in their territory

“These new approaches within Congress, on issues that our country has already debated and reached a consensus on, not only generate uncertainties and distrust that put the brakes on investments in new lithium ventures, but also have a direct impact on putting the brakes on investments in exploration and the entry into the productive phase of mining ventures of other metals, such as copper”, says the COFEMIN communiqué.

Companies’ reactions

Franco Mignacco, president of the Argentine Chamber of Mining Entrepreneurs (CAEM) and president of mining company Minera Exar, was one of the spokespersons who rejected the initiative, when presenting the international exhibition Arminera 2023, that will take place in the country this month.

Ignacio Celorrio, president for Latin America of Lithium Americas, also expressed his rejection of the legislators’ proposal, pointing out that the parent companies of international companies are more concerned about this type of projects that affect the legal framework, than the unstable economic context Argentina is going through.

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