Lithium is key for the energy transition. Twenty percent of world reserves of this mineral are located in Argentina. According to the Rosario Stock Exchange, China is investing nearly US$3.4 billion in Argentina in projects of the so-called “white gold” in Jujuy, Salta, and Catamarca. The United States, however, is betting on not losing ground in mining lithium and other critical minerals.
To this end, United States Under Secretary of State for Economic Growth, Energy and Environment, José W. Fernández, signed a memorandum of understanding with Argentine Foreign Minister, Diana Mondino, on Thursday, seeking to strengthen cooperation in mining investments between the two countries.
He also announced a US$500,000 investment to assist Argentine laboratories and said he would be meeting with 200 companies seeking to invest in mining projects in the country.
“We are not worried,” Fernández said, referencing Chinese investments in Argentina. The undersecretary spoke at a meeting with journalists in the U.S. Embassy in Buenos Aires where Ámbito and the Buenos Aires Herald were present.
He pointed out that his country is promoting supply chain diversification for critical minerals. “China controls two-thirds of the critical minerals produced worldwide,” Fernandez explained. “Whether it’s the supermarket or the minerals market, we all know that having only one seller is never good.”
The U.S government official gave an example of what he considers China’s abuse of its dominant position: “The country is flooding the lithium market; between 2023 and 2024, lithium prices per ton have dropped from US$80,000 to US$12,000. This makes it a monopoly,” he said.
Fernandez, however, clarified that the U.S. government does not advocate breaking relations with China. “We want China to compete with the same rules: that they do not steal intellectual property, that they comply with the same requirements of transparency and labor and environmental legislation as other countries,” he clarified.
With this objective, the United States is also promoting a meeting on Friday between representatives from 200 companies from fourteen countries seeking to invest in Argentina with members of the national government, as well as representatives of the five provinces that have critical minerals. These companies are part of the Mineral Security Partnership (MSP), a group created to collaborate in investments in minerals such as copper, lithium, manganese, and cobalt, which are used in cell phone batteries, cars, and computers to collaborate in the energy transition.
“According to the International Energy Agency, by 2050, we are going to need 42 times the amount of lithium we use today to reach those goals. This is a necessity for the world and an opportunity for countries like Argentina, which has these resources,” Fernández told journalists at the U.S. Embassy.
Asked whether Argentina’s exchange restrictions could dissuade companies in the sector from investing, he admitted that he was not an expert on the subject but pointed out that it was a point U.S. companies have highlighted on several occasions. When asked by the Herald if the Large Investment Incentive Regime (RIGI, for its Spanish initials), could be an incentive to invest, Fernandez responded positively.
“In one of the conversations I had today, a company that is considering a major investment spoke very favorably of it — they cited it as something that has helped them make a decision,” he said.
Fernández was also asked if the Inflation Reduction Act, a U.S. law that subsidizes electric cars that have batteries made in the United States or countries it has a free trade agreement with, would not be detrimental to U.S. investments in Argentina.
“The market is open and lithium is going to be needed in many parts of the world,” Fernandez said. “So, the United States is a market, but it is not the only market,” he said, clarifying that his initiative seeks to get other MSP countries to also invest in mining projects in Argentina.
Although with some caution, Fernandez also offered his opinion on the Milei administration. “We support the efforts of this government to stabilize the economy and boost growth. Of course, we also must recognize that we have to find a way to minimize social cost, which is very important,” said Fernandez, who declined to comment on the political difficulties the government is facing.
“I come from a country where the Congress does not agree, so I am not going to comment on that issue”, he said, laughing.
The environmental issue
Even before taking office, Milei has consistently denied the existence of climate change and defunded programs to combat it. “I am not very aware of Milei’s statements but what I do know is that Argentina has reaffirmed its commitments to the Paris Agreement many times; it is a matter of helping them,” said Fernandez.
To that end, the U.S. government is donating US$500,000 in technical assistance to Argentina. The money, which will be provided by the Pacific Northwest National Laboratory and the Department of Energy’s National Renewable Energy Laboratory, is meant to help develop greenhouse gas reduction strategies and accelerate the transition to clean energy.
Fernandez made it clear throughout the meeting that he is looking for environmental stewardship.
“The challenge is to carry out mining projects in a way that benefits communities and workers, that respects environmental laws and requirements so that countries don’t have to choose between [avoiding] environmental disaster and economic growth,” he said.
“Countries have realized that if they don’t [take care of the environment], they’re not going to succeed,” he said. “People are going to block them from mining. It’s as simple as that.”
In March, a Catamarca Supreme Court ruling ordered the province to suspend activity at a lithium mine called Salar del Hombre Muerto (Dead Man Salt Mine) after it was shown that mineral extraction had dried up a river. Livent, the company involved, is from the U.S.
“I am never going to say that our companies have done all the right things,” Fernandez said. “I don’t know the specific [Catamarca] issue, but I don’t want to say that the others are devils and we are the angels. If we succeed here and continue to demand high standards, we will create what we call a race to the top, a situation where those that pollute and abuse their employees are not going to win.”