The Government advances with a bilateral agreement with the United States for Argentine lithium. Last year, US President Joe Biden passed the Inflation Reduction Act. There it is stated that they will invest US$400,000 million in the energy transition, for which it is expected that the demand for lithium will multiply by four. Despite the fact that Argentina is the second country in the world to have the largest amount of lithium resources, it does not have a key requirement required by law. However, that difference could be saved in a negotiation carried out by the Minister of Economy, Sergio Massa.
In August 2022, the United States passed the Inflation Reduction Lawbetter known as IRA, whose initials refer to The Inflation Reduction Act. One of its points provides the largest investment in history to address the climate crisis. Among the specific measures is financing low-emission technologies, with credits for solar energy or the purchase of electric vehicles. The projection is that by 2030 the United States could have a market where half of the vehicles are electric.
With these measures, it is expected that the demand Annual lithium production reaches 2.4 million tons for that year, four times higher than world production in 2022, according to Benchmark Mineral Intelligence. For a country like Argentina, which has the second largest amount of lithium resources in the world, it could be a great opportunity to increase exports.
In fact, there are currently two projects in production in Argentina that are being expanded, and another 6 under construction. Economy projects that in 2025 production will climb to 200,000 tons per year, which will imply exports of US$ 5,653 million, almost 10 times more than the current level. However, United States law has a requirement that Argentina does not meet: the credits granted to citizens for the purchase of vehicles, up to US$7,500 per vehicle, will be for manufacturing with resources from the United States, or countries with which the US has free trade agreements.
However, this difference could be bridged in intense negotiations that Massa is conducting with high-level White House officials., in conjunction with the Argentine ambassador to the United States, Jorge Arguello. In principle, the Government welcomed three signs that could lead to saving the lack of a free trade agreement, as other countries in the region have, such as Chile.
“Massa and Arguello achieved that there is a link on this issue, and that the United States wants to cooperate to reach an agreement through politics,” said an official source. First sign: regulation. Months after the approval of the law, the regulation of the electromobility chapter was published last week. There it is indicated that the State Department suggests that in addition to free trade agreements, it also includes the countries with which the United States signs bilateral agreements.
The second sign that they read positively within the Government is a report recently published by the US Department of the Interior together with the geological survey, entitled “Mineral Commodity Summaries 2023”. In the part that talks about lithium, it states that “consumption for batteries has increased significantly due to the growing market for electric vehicles and electronic devices.” Regarding production, he assures that the United States supply of lithium carbonate only comes from a mine in Nevada. For what they required sources of information, where Argentina leads with 51%, on an average made between the purchases they made between 2018 and 2021. It is followed recently by Chile with 40%, China with 4%, Russia with 3% and others with 2%.
As a third sign is the agreement on “critical minerals” that Japan signed with the United States last week to “strengthen the supply chain.” Although the geopolitical relationship between the United States and Japan is very different from the one that the US has with Argentina, the agreement marks a reference. Official sources say that in the Argentine case, it will be a bilateral agreement, but it is not clear what form it will take. “We are interested in being a part because it is a huge opportunity, but for the US, Argentina is not just another country,” said an official source. The expectation is that in the coming months there will be concrete news.
The issue was discussed at the meeting of President Alberto Fernández, with Biden at the White House. Also with Massa and Wendy Sherman, number two in the State Department, and with Juan González, Biden’s special advisor for Latin America. The daily talks are carried out by Arguello and Ávila with David Turk, US Secretary of Energy. Multinationals with a presence in Argentina are also lobbying for the agreement to advance: from mining companies like Livent and Allkem, to automotive companies like General Motors and Toyota.
When asked by this newspaper whether these advances could make a difference in Argentina’s bilateral relationship with China, a country that is increasingly investing in lithium, official sources replied: “The government’s position is that the exports they make companies based in Argentina are businesses between private parties”. In 2022, Argentine lithium exports were 42% to China, 31% to Japan, 13% to South Korea, and just in fourth place to the US, with 9%, and the rest in “others” .
Source: Ambito
