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As the US remains “grossly unprepared” to meet the exponential increase in demand for lithium, it stakes a claim to Argentina’s massive deposits of “white gold.” All for Argentina’s benefit, of course.
The main spur for this article was a video conference last week by the Mexican geopolitical analyst Alfredo Jalife-Rahme, titled “The Lithium War Between China and the US.” Until now China has been winning that war handily, mainly because it realized the strategic importance of lithium long before the US, or at least took earlier action to secure supplies and build up the different links of the supply chain. The Asian giant is now the number one refiner of processed lithium and the number one maker of lithium batteries.
By 2020, China controlled 76% of global lithium-ion battery production capacity, while the US accounted for just 8%. As Jalife points out, between 2018 and 2021 China spent twice as much money securing lithium mining rights as the four main economies of the Anglosphere (US, UK, Canada and Australia) combined.
Now, the US and its five-eye allies are having to play catch up. Much of their attention will be on Bolivia, Chile and Argentina, the three South American nations whose borders intersect in the salt flats basins known as “the lithium triangle.” This area not only accounts for roughly two-thirds of the world’s known reserves of lithium; its lithium is also much easier to extract than many other deposits. It is here where the main focus of what Jalife calls the “lithium war” will be centered. Asked by a listener whether this will mean more coups d’état in the region, Jalife responded, with a wry, weary smile:
Yes, we need to have them on the radar. And attacks. We are going to see some strange accidents. Yep, same as always. The setting is the same,… it’s the resources that are different. This time they are strategic.
Of course, according to some reports, Latin America has already suffered one coup d’état over the white metal. In 2019, Evo Morales, the then-president of Bolivia, the country with the largest lithium deposits on the planet, was toppled by a coup. Morales and Bolivia’s current President Luis Arce blame said coup in large part on companies with commercial interests in the lithium sector, including TESLA whose CEO Elon Musk famously tweeted at the time: “We will coup whoever we want. Deal with it!”
Chile’s Undesirable Constitution
Last week, the Bezos-owned Washington Post ran an editorial kindly pointing out that Chile’s proposed new constitution needed a significant rewrite before being presented to voters this past weekend. The first reason cited for opposing the new constitution was its environmental provisions, which would pose a serious threat to American mining companies’ ability to exploit Chile’s lithium. As you can see, even the first word of the article is “lithium”:
Lithium is a key input in batteries that run millions of laptops and upon which the United States is basing its electrified automotive future. Chile sits atop the world’s largest lithium reserves; it produced about 25 percent of the world’s commercial supply in 2020. That’s reason enough to pay attention to Chile’s impending Sept. 4 referendum on a proposed new constitution: It could recast the legal framework for mining in the South American nation, which has an 18-year-old free trade agreement with the United States.
This one paragraph almost perfectly encapsulates how Washington views most other countries on the planet — as sources of (ideally cheap) resources. And remember: this is a WP editorial, not a column, meaning it reflects the official stance of the newspaper.
That is not to say that Chile’s proposed constitution wasn’t problematic and couldn’t have done with a rewrite — just not for some of the reasons expounded by the WP. In the end, an overwhelming majority of Chileans voted against the proposed constitution, anyway, which will no doubt have pleased Bezos and the Washington establishment his newspaper speaks for (and most of the time to).
Main Target: Argentina
But it isn’t Chile’s lithium that Washington covets the most. It is Argentina’s, which is far less protected and regulated than Chile’s or Bolivia’s. It is the only one of the three where lithium is not defined as a strategic resource. The fact that Argentina’s economy is quite literally on its knees, with inflation galloping at a 30-year high of 71%, and its heavily indebted government is desperate for US dollars is an added bonus. That it is also home to the world’s fourth-largest shale-oil reserve and the second-largest for shale gas — the so-called Vaca Muerta (literally meaning “Dead Cow”) — is the icing on top.
Argentina’s President Alberto Fernández and Economy Minister Sergio Massa will be paying the US a visit later this month, where they will meet up with Joe Biden, the IMF, the Petroleum Club of Houston as well as almost a dozen governors. All of this is purely for Argentina’s benefit, of course, as the US Ambassador to Argentina, Marc Stanley, told a recent gathering of delegates in Buenos Aires.
“The United States wants to have a relationship with Argentina so that it can be a leader in Latin America. Its intention is to help with infrastructure, food, energy, lithium… We don’t need you, but we want to help the world and to partner with you.”
So far, just two lithium projects are in operation in Argentina: one run by the US company Livent, in the Salar del Hombre Muerto in Catamarca province; and another in neighbouring Jujuy province being managed by the Australian company Orocobre, which is associated with Japan’s Toyota and the provincial company JEMSE.
US interest in Argentina’s lithium deposits was clearly laid out in a 2021 report by the Washington-based Center for Strategic and International Studies (CSIS), which somehow found its way into the hands of the Instituto Patria, a left-leaning think tank founded by Argentina’s Vice President Cristina Fernández Kirchner. The report was then passed on to the Argentinean newspaper Pagina 12. The following is a largely machine-translated excerpt of the resulting article:
“Argentina has the second largest lithium reserves in the world and is the fourth largest producer of lithium carbonate, behind Australia, Chile and China, and contributed 6 percent to the world supply with 33,000 metric tons in 2021,” says Andrew Sady in his report [for CSIS]. “Of the Latin American countries that have lithium reserves, Argentina’s market is most open to private sector investment… The federal government has not imposed any regulation on foreign investment in the lithium sector and allows the market to dictate the development of the industry.” For this reason, “several projections and experts agree that, within the next decade, it is expected to be the country that implements the largest additional production of lithium. Benchmark Mineral Intelligence forecasts an increase of 360% by 2025.”
Another section explains why the United States really needs Argentina, and not the other way around: in the one area where the mineral… is increasingly in demand for the transition to clean energy — car production in the middle — , a possible global shortage is expected by 2030, by which point China is expected to control 80% of the production chain. And Argentina, with its Latin American neighbors, will continue to offer the only easily extracted reserves.
It reads: “Given the geopolitical trade war with China, China could use its position to steer the future of the global transition to clean energy. Given the current state of the lithium supply chain, the United States is grossly unprepared” to meet the exponential increase in demand over the next decade and beyond. Investments and coordination with US allies and partners will be required, he notes, “as recommended in the White House’s 100-day review of Executive Order 14017 on supply chains.”
The Race for the World’s Lithium Heats Up
For the US, lithium procurement is now a national security issue. In June, the US signed a “minerals security partnership” (MSP) with some of its strategic partners, including the European Commission, Canada, Australia, Japan, the Republic of Korea and the UK. In an accompanying press statement, the US Department of State said:
“The goal of the MSP is to ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of countries to realise the full economic development benefit of their geological endowments.”
That this is happening at the same time that the three lithium-triangle countries, as well as Mexico, have begun to talk about setting up a price-setting consortium of lithium producing countries based loosely on OPEC is probably no coincidence. Bolivia already nationalized its lithium deposits long ago and is yet to actually produce lithium at an industrial level. Mexico’s President AMLO recently set up an autonomous state-owned agency to oversee the development of lithium mining and make sure the nation’s economic and environmental interests are being protected. Jalife calls this model the “sovereignization” of lithium.
In Argentina, control of primary production and the salt flats is in the hands of private companies, and the role of regional governments is limited to collecting taxes and royalties. In Buenos Aires, not everyone is happy with this model, or with the idea of flinging the doors open to US investment in the sector. On August 30, Argentina’s Vice President Cristina Fernández Kirchner warned the Senate last week that “they” (presumably the US) are coming for the lithium:
“When we are all happy because we have food, energy and lithium, let’s not just be happy. Let’s also pay attention. Because they are going to want to take it away without giving us anything.”
Last Thursday evening, as NC readers are no doubt aware, a 35-year old Brazilian-born Uber driver called Fernando André Sabag Montiel tried to assassinate Fernández de Kirchner, often referred to as CFK, as she greeted supporters outside her home. Fortunately, the would-be assassin’s semi-automatic pistol failed to fire and he was immediately arrested. Now begins the long, hard job of trying to piece together what happened.
Was Sabag Montiel working alone? He certainly appears to have close ties with far-right groups as well as a penchant for Nazi tattoos. Was he working with someone else? Was he working for someone else? Given how much of a hash he made of the job, that seems highly implausible but not entirely out of the question.
Could it have been an inside job (as in, a fake assassination), as many CFK’s detractors on the right want to believe? Again, this is unlikely but not beyond the realms of possibility. After all, Fernández de Kirchner, often referred to as CFK, is currently on trial for corruption. If found guilty, she faces up to 12 years in prison. Her defense team are already calling for the charges to be dropped because of the assassination attempt, which they argue is a result of the heightened political polarization being caused by the controversial trial.
The parallels with Brazil’s former (and quite probably future) President Luiz Inácio Lula da Silva are striking. Lula was jailed on spurious charges of corruption during the lead up to the 2018 general elections, which he would almost certainly have won. An exposé last year by The Intercept revealed the extent to which the US Department of Justice orchestrated the now-disgraced Operation Car Wash in Brazil, which led to the downfall of Dilma Rousseff’s government, the imprisonment of former President Lula, and the eventual election of far-right president Jair Bolsonaro.
If she can stay out of jail, CFK would also be a strong, perhaps even unbeatable, candidate in Argentina’s presidential elections next year. If that were to happen, her government would be far less likely to give away Argentina’s crown jewels to the US as willingly as the current dollar-starved administration seems to be. She would also be more likely to drive a tougher bargain in negotiations with the IMF, just as her husband, Nestor Kirchner, did before her. None of which, of course, is in Washington’s interests.
There are few certainties and myriad unknowns surrounding the attempted assassination. It hardly helps matters that the police investigating the case appear to have “accidentally” wiped Sabag Montiel’s mobile phone. As with so many assassination attempts, successful or not, the public may never know what really happened.
For the moment Washington’s involvement in the job cannot be entirely ruled out, even though Sabag Montiel does appear to fit the lone wolf profile rather snugly. He is also anything but professional.
It is also true that US-sponsored assassinations of senior political figures in the region have become somewhat of a rarity these days, thankfully. Washington much prefers to use less bloody means to influence the region, including what has come to be known as lawfare — the use of a nation’s legal system and institutions to damage or delegitimize an opponent, as has already happened in Brazil, Ecuador and now Argentina. Nonetheless, when it comes to offing Latin American leaders, Washington has form. In this case, it also has motives.