According to experts, despite the great potential of the countries of the “lithium triangle,” which account for more than 60% of global production, achieving price control is impossible.
Accordingly, it is inappropriate to consider similarities between a possible organization and OPEC.
Discussions about the possibility of creating an international lithium organization of Argentina, Chile, and Bolivia to regulate the production and export of this mineral and influence international prices are due to the regulatory, political, and legal differences between the three countries that make up the so-called “lithium triangle.”
The idea of a sort of “OPEC (Organization of Petroleum Exporting Countries) for lithium” is more than a decade old but has gained momentum in 2022 due to the boom in international prices against a backdrop of strong global demand driven by the energy transition and increased development of electric mobility.
According to analysts, this global context represents an opportunity without challenges for producing countries if mineral exports are to contribute to their growth and development.
However, one of the main differences between the members of the “triangle”, according to experts, is that the central governments of Chile and Bolivia have declared lithium a strategic resource, but not in Argentina, a federation where the mineral belongs to the provinces that have the deposits.
Federico Nacif, professor of models for exploiting lithium deposits in Latin America, pointed out the current situation in Argentina, where there is no national policy for the strategic mineral.
“In Argentina, lithium is still an ordinary mineral resource that any private actor, domestic or foreign, can acquire through the ordinary mining concession granted by the provincial authorities in perpetuity and without any conditions,” stressed the professor from the Universidad Metropolitana por la Educación y el Trabajo (UMET).
Consequently, the weight of the private sector in all decisions that may affect the sector is very important, and its refusal is one of the determining factors in the current inability of an organization to intervene in production, practices, and prices.
The Argentine government has stressed that lithium belongs to the provinces, confirming the federal nature of the South American country.
It has ruled out the possibility of nationalization and confirmed the work of the Lithium Round Table (Mesa del Litio), composed of representatives of the national executive and the provincial governments of Catamarca, Salta, and Jujuy in the northwest.
“Any proposal or idea of nationalization has the fundamental obstacle of our national constitution, which establishes that natural resources belong to the provinces, and no law can contradict that,” Fernanda Ávila, Argentina’s mining secretary, said recently.
“Moreover, I am convinced that the Lithium Round Table is a platform for dialogue on the challenges and opportunities facing the country and the provinces related to this key resource for the energy transition,” she added.
Martín Obaya, director of the Centro de Investigaciones para la Transformación (Cenit) at the Universidad Nacional de San Martín, also pointed out that the provinces “are not in favor of the formation of a cartel” that can intervene.
The lithium expert pointed out the great differences between the three countries regarding resource management, investment, and the industry development system in general.
“If we look at the region, Argentina, which has taken a very liberal approach to mining generally, can be said to be at one extreme.”
“Lithium falls into this scheme; therefore, it is the country most open to foreign investment and investment in the mining phase.”
“At the other end of the scale is Bolivia, a country that from the beginning has exercised strong state control over the resource,” Obaya explained.
He recalls that the Bolivian State decided that exploitation and ownership of the deposits could only be in the hands of a state-owned company, which is why Yacimientos de Litio Bolivianos (YLB) was created.
“In Bolivia, it is possible to join forces with private companies to refine this raw material and produce cathodes or batteries,” explains the expert.
“In Chile, 20 or 30 years ago, with the declaration of a strategic resource, the state decided to sign special operating contracts with private companies.”
“It is very difficult to achieve such an instance because if you do not have control over the company, it is difficult to ask private companies to increase prices.”
“On the other hand, in Latin America today, increasing prices is not a problem (…) What is a problem for national development, for example, in the case of Argentina, is the lack of public control and direction of these investments and the State’s participation,” said Nacif.
The possibilities the researchers believe can be explored involve mechanisms that allow the State to get a foothold in the industry.
The idea is that the Argentine State could siphon off revenues “from the difference between international prices and production costs and advance in a value chain,” Nacif concluded.
News Latin America, English news Latin America, lithium “OPEC”, lithium triangle
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