Argentina, Bolivia and Chile have 80% of the world’s reserves of lithium brine. Argentina is the only one of the three in the so-called “lithium triangle” where permission to extract the mineral is granted by government concessions. Its first lithium mining project began two decades ago. Today there are 46.
As demand grows, access to Argentina’s reserves becomes ever more sought after, including by China, which is responsible for 35% of global demand for newly extracted lithium. Chinese companies control the supply of 75% of the electrolyte solutions used in lithium batteries.
Making progress with an extractive project in Argentina requires the approval of local communities, compliance with national and international legal requirements, and respect for human rights in general.
Are mining companies meeting these conditions?
An investigation by the Environment and Natural Resources Foundation (FARN) into the social and environmental impacts of lithium mining in the salt flats of Olaroz-Cauchari in Argentina’s Jujuy province has revealed two mining companies have failed to comply with the law.
Mineria Exar and Sales de Jujuy have not provided a free and informed consultation process with the indigenous communities who own the territory where their two projects are located. Though there was some participation, the consultation process did not take place free from influence.
The companies are obliged to provide information in a timely and comprehensible manner. In fact, the lengthy and technical nature of the materials made them very difficult to parse.
According to statements from community members, the companies also failed to disclose all relevant information on the risk factors and their potential environmental impacts, as well as access to technical studies on water pollution risks.
The concerns of communities linked to the environmental impacts of mining have not been sufficiently taken into account
Although it is the state’s responsibility to guarantee the right to participate in consultations, the FARN investigation highlighted the absence of competent authorities at different points in the process.
The provincial government did not supervise dialogue between international companies and local communities. Nor did it comply with the requirement to provide basic information to help understand the environmental impacts of lithium mining in the area. This has negatively affected the communities’ ability to evaluate the project in question and/or to control their activities, according to FARN.
The concerns of communities linked to the environmental impacts of mining have not been sufficiently taken into account, the report concludes.
The lithium project led by Minera Exar and involving Chinese company Jiangxi Ganfeng Lithium was the second to be set up in the area, after Sales de Jujuy.
Minera Exar was originally made up of the Canadian company Lithium Americas Corp and Sociedad Química y Minera de Chile (SQM). However, in 2017, Jiangxi Ganfeng, the largest lithium producer in China, made an investment in Lithium Americas, becoming its largest shareholder.
The share of Lithium Americas owned by Jiangxi Ganfeng
Jiangxi Ganfeng then financed the construction of the lithium extraction project in Argentina with US$125 million, for which it obtained the right to purchase lithium carbonate production from Minera Exar at market prices for the next 20 years. Currently, Jiangxi Ganfeng owns 16.94% of the shares of Lithium Americas.
Just one year later, Jiangxi Ganfeng and Lithium Americas acquired SQM’s shares in Minera Exar, putting Minera Exar and its lithium project in Argentina in the hands of the Chinese company (37.5%) and its Canadian peer (62.5%).
Thanks partly to the contribution of Chinese capital, the Minera Exar project has continued its progress. Today it is in the initial stage of production with a planned start of lithium sales for 2020.