Florencia Barragan 
The government is focusing on lithium, the mineral of the future, given its importance in energy transition. They consider sending a bill package to Congress to industrialize it in order to create added value and jobs. The initiatives may include a “quota” bill for the internal market, ad valorem adjustable royalties and business incentives with a new framework for electromobility, according to official sources. All measures planned by the government will be agreed upon with the provinces, who own the resources.
The government and the provinces revealed their plans publicly for the first time –although not directly. They did so through a statement released by the Lithium Board –formed by the governments of Jujuy, Salta and Catamarca– together with the Secretariat for Strategic Affairs headed by Mercedes Marcó del Pont, and the state-owned company Y-TEC (YPF Technology). The statement is entitled: “Agreement on the need for companies to add value to their production.”
Regarding the establishment of quotas to prevent the mineral from being fully exported, as is currently the case, the statement reads: “During the meeting, the Board chaired by Jujuy governor Gerardo Morales agreed on the need to implement mechanisms so that lithium-producing companies allocate a percentage of said production for industrialization and value addition in Argentina, particularly in the provinces that produce the resource, in the face of the electromobility challenge and the need for renewable energy storage”.
The official goal is to get the mineral industrialized in Argentina and, with that in mind, the government believes it shouldn’t all be exported in the form of lithium carbonate or hydroxide to other countries, which then assemble cells and batteries. For this reason, the project they are working on may include establishing a production volume quota that would become available for industrialization projects. The quota could be progressive, starting at 5%, and may also include a “differential price” –that is, with quantities and prices lower than the export values.
In order to spark interest from companies willing to engage in local industrialization, the government is working on a new electromobility bill that provides business incentives. An official source said that the proposal is similar to the “Chilean model”, with the difference that the Argentine vehicle production network is much broader than in Chile, as it has several car factories. Unlike the Chilean and Bolivian models, they rule out the idea of nationalizing lithium or declaring it a strategic resource. In a January meeting with Adefa (the Association of Auto Makers) and Smata (the Mechanics and Auto Workers Union), the government expressed to the automotive sector its interest in them moving forward with electric vehicles.
Variable royalties
One of the other issues raised by the Lithium Board is related to taxes: “The Lithium Board expressed its concern that the provinces are not participating in the extraordinary profits obtained by the companies as a result of the considerable growth of international prices, something for which they are evaluating measures to adopt,” they stated.
On this issue, one of the measures that was being analyzed has already been implemented: the elimination of export refunds, a stimulus for companies that was transformed into a fund for the provinces. The refunds were established on a mineral that was selling in its lithium carbonate format at US$4,000 a ton in early 2021, while today it is traded at more than US$71,000, according to Trading Economics –which explains why lithium exports tripled.
Another issue on the table is the future of royalties obtained by the provinces: there could be a trend towards an “adjustable royalties” scheme that would depend on the international price or the processing level of the mineral in the country. According to the statement, Morales said at the meeting: “We have raised our concern, since there is an exorbitant increase in lithium prices at the international level, and this is not reflecting on the income received by lithium-producing provinces, an issue we are going to discuss with the companies in Jujuy, Salta and Catamarca”.
