In the midst of the short circuit registered between the northern provinces due to the decision of the government of La Rioja to advance with the approval of a law that declares it a “strategic resource” and opens the door to greater state interventionism; The Minister of Economy, Sergio Massa, resolved to eliminate the refunds on exports of lithium and its derivatives that the State was paying to prop up private investments for the production of the so-called “new white gold”.
Through resolution 15/23, Massa decided to “instruct the secretaries of the Ministry of Economy to project the necessary administrative act to proceed with that the reimbursement to exports of lithium, lithium oxide and hydroxide, lithium chloride and lithium carbonate be without effect“.
In this way, the mining companies that are dispatching their production to the international market they will stop pocketing current tax refunds that represent between 2.5% and 5% of the exported value.
The Ministry of Economy justified the measure, noting that “today, the litiferous sector has registered exponential growth, both in terms of mineral prices -driven by a great global demand-, as well as in the advances of the numerous projects that They are based in the country.
He further noted that “lithium mining, since its development, has seen significant improvements in terms of competitiveness, technology and infrastructure”.
After indicating that “the incentive to refund exports has met the established objectives”, the resolution remarked that “Electromobility has caused a change in the international market and an abrupt growth in the demand for lithium that produced an exponential increase in the price and also in the profitability of the projects”.
Sergio Massa resolved to eliminate the refunds to exports of lithium and its derivatives that the State was paying
The current scenario where lithium investment and production projects are being developed has been altered in recent days by the move of the La Rioja governor Ricardo Quintela to proceed with a law that declares lithium and its derivatives as a “strategic resource” and allows the exploratory permits previously granted in that province to be suspended.
The legal change—which was voted in the provincial parliament in mid-December and now the governor is preparing to enact—generated a marked concern in the provincial governments of Jujuy, Salta and Catamarca which have the most advanced exploitation projects underway with a strong participation of capital and private investors who carve strongly in the international lithium business.
Governors Gerardo Morales (Jujuy), Gustavo Saénz (Salta) and Raúl Jalil (Catamarca) consider that the Riojan movement could scare away companies and mining groups that have new investments in the sector in the pipeline. This concern was strengthened when seeing that the spirit of the legal modification coincides with the proposal made recently by the ultra-Kirchner national senator, Oscar Parrilli.
The main spokesperson for Vice President Cristina Kirchner came out to publicly demand that lithium become part of the list of “strategic resources” in order to “order the activity so that the provinces and the Nation collect what corresponds, add value in national territory, employment is generated and private companies have a reasonable profit”.
Lithium, a strategic resource: the reaction of the UIA
One of the main questions raised by Quintela and Parrilli’s position came from the Argentine Industrial Union (UIA).
After noting that “heThe projects underway generated in 2022 more than 8,000 jobs and US$700 million in income from exports“, the industrial entity led by Daniel Funes de Rioja warned that “the suspension of concessions and permits of the Riojan law damages this future potential in the region, both for current investments and for those that are being planned for the coming years “.
The mining companies that dispatch their production to the international market will stop pocketing the current tax refunds
“What do we want? What do they stop? What does the lithium hour pass?”, the head of the UIA asked himself and stressed that “if one suddenly changes the rules of the game, what is generated is a retraction not only with respect to La Rioja but in the entire universe of possible investment projects oriented towards lithium production“.
According to data from the Argentine Chamber of Mining Entrepreneurs (CAEM), the country, with 21% of the total, has the second largest lithium reserve in the world, after Bolivia that concentrates 24%. For its part, the foundation for economic and energy studies Fundar calculated that, in a five-year period, the current level of exports of US$700 million per year could rise to more than US$5.100 million per year if most of the projects that have exploratory permits.
Regarding the evolution of mineral prices at a global level, a report by the international consulting firm Benchmark Mineral Intelligence (BMI) highlighted that, in the last five years, the value of lithium carbonate — the raw material used for lithium-ion batteries—increased from an annual average of $14,000 a ton to just over $80,000. According to BMI projections, the growth that is expected in the production of electric vehicles promises to increase the current commercialization of 600,000 tons of lithium per year to more than 2.4 million tons in 2030.
The map of the provincial lithium projects
The map of the most developed lithium production projects shows that, in the province of Jujuy, the main undertakings are in the hands of the Australian mining group Orocobre and Japan’s Toyota Tsuho.
In the province of Catamarca, the Fénix project stands out, which is in charge of Livent Corporation, a subsidiary of the US FMC group.
In Salta, meanwhile, the Anglo-Australian holding company Rio Tinto acquired the Rincón lithium mine for US$825 million and the South Korean mining company Posco announced the disbursement of US$4,000 million in another long-term extraction project. They are joined by the Chinese group Ganfeng Lithium, which in mid-2022 bought a salt flat that was owned by the local oil company Pluspetrol with an investment commitment of US$1,000 million..
And in La Rioja, the most significant exploration permit that is in force and that could be suspended with the new legislation is headed by the Canadian Origen Resources.
