Introduction
Available lithium resources
Strategic resource in Jujuy
Forbes magazine recently dubbed Argentina the "Saudi Arabia of lithium", together with Bolivia and Chile.(1) While this may be somewhat overstating the situation - lithium can be found across the world in saltwater, rocks and salt lakes and the financial returns to these countries from lithium is unlikely ever to compare the returns to Saudi Arabia for oil - Argentina does have significant competitive advantages in mining lithium. Jujuy, one of the three provinces with substantial lithium reserves, has taken steps to ensure that the benefits from lithium will be shared across the province. The governor of Jujuy recently decreed that lithium is a strategic resource, and established a commission to consider and provide necessary approval for lithium projects.(2)
Argentina, Chile and Bolivia collectively have between 70% and 85% of the world's known lithium reserves in brine, located in the vast salt flats high in the Puna region.(3) However, lithium mining has not yet commenced in Bolivia and is at a relatively low level in Argentina, in comparison to the volume of its reserves.
Although there may never be a 'Saudi Arabia of lithium' and the suggested creation of an equivalent to the Organisation of Petroleum Exporting Countries for lithium is premature,(4) lithium mining in Argentina has certain competitive advantages in comparison with mining in other countries. Argentina has arguably some of the highest-quality lithium reserves in the world. Moreover, as Argentina's lithium is located in brine beneath salt flats, it is relatively inexpensive to extract. Notwithstanding that the reserves are located in the Puna region, several thousand metres above sea level, they are also located only a couple of hundred kilometres from Chilean ports and close to a major gas pipeline. Argentina is unlikely to be able to control the market, but greater profits could be realised by investors from lithium mining in Argentina in comparison to other countries, due to the lower expenses.
Jujuy is the only province in Argentina where there are specific regulations on lithium exploration and exploitation, outside of those provided for in the Argentine Mining Code and the provincial procedural mining codes. Following the lead of the respective presidents of Bolivia and Chile, the governor of Jujuy, Walter Barrionuevo, recently declared lithium a strategic resource and issued Decree 7952/2011. The governor further stated that as a non-renewable natural resource, lithium should become a source of increased local value and employment for all of Jujuy, in the hope of promoting sustained growth in the socio-economic development of the province.
The decree sets out additional procedural requirements for assessing the economic and social impacts and benefits that may result from approving each lithium exploration and exploitation project. Under the decree, such projects must be submitted to the new Committee of Experts for the Comprehensive Analysis of Lithium Projects. The committee be comprise the Jujuy minister for production, as well as various other politicians, scientists and academics. The decisions of the committee will be taken by majority. For such projects to be approved, a favourable opinion from the Jujuy Department of Mining and Energy Resources will be required.(5)
Significantly, the decree applies retrospectively. Article 4 of the decree provides that even if a project was approved prior to the decree being issued, it will need to obtain approval from the committee. As only a limited number of lithium projects are at exploration stage throughout Argentina, projects at the prospection and exploration stages are most likely to be affected.
For further information on this topic please contact Federico Godoy or Phillip Smith at Beretta Godoy by telephone (+54 11 4326 7386), fax (+54 11 4326 7396) or email ([email protected] or [email protected]).
Endnotes
(1) Koerner, Brendan, "The Saudi Arabia of Lithium", Forbes, November 24 2008, www.forbes.com/forbes/2008/1124/034.html, accessed August 4 2011.
(2) Jujuy, Decreto de Necesidad y Urgencia 7592/2011.
(3) US Geological Survey 2011.
(4) Samuel, Liliana, "Argentina considers OPEC-like deal for lithium," Agence France Presse, www.google.com/hostednews/afp/article/ALeqM5hy88VXCp0vjw_XHlZO_-s7dE2t7Q?docId=CNG.d86ceec20706af0a574a3d87e2ba3a1c.ec1