*The image used for this article is not mine. It is the work of Cebbi. The rest of their work can be found at https://pixabay.com/users/cebbi-15537516/?utm_source=link-attribution&utm_medium=referral&utm_campaign=image&utm_content=4927935.
*This essay was originally written for one of my Sociology courses.
This past year the sale of electric vehicles jumped 60%, passing the barrier of 10 million cars sold, resulting in 1 in 7 cars now being electric vehicles (Diaz). This is spurred on by a transition away from the gas-guzzling cars of the past, to the renewable alternatives of the future. Vivienne Walt, contributor to fortune Magazine, claims that as the world has intensified its transition towards more sustainable lifestyles, the demand for cobalt has “gone skyrocketing” (Youtube). However, her documentary discusses the abuses stemming from cobalt extraction; what I focus on is the soon-to-be enormous demand for lithium.
Just like its fellow mineral, Lithium ore is mined to be used in the creation of phone and laptop batteries and the surging market of electric vehicle batteries. The United Nations Development Programme estimates that Latin America holds “60% of identified lithium globally (UNDP).” However, these reserves are heavily concentrated within three neighboring countries. The so-called “Lithium Triangle” of Bolivia, Chile, and Argentina have upwards of 88% percent of the region’s reserves and 53% of global total (Hernandez). Political commentators such as TLDR News claim that the rising demand and price of lithium ion could help the nations of the Lithium Triangle along the process of development, as the extraction of the ore holds tremendous potential for companies who extract it and the governments that regulate this. However, one thing commentators miss is that these three countries, through neighboring, have vastly different political landscapes and corporate policy, which lead to divergences when creating policy around lithium-ion extraction. In this essay I seek to reflect on the recent histories of Bolivia, Argentina, and Chile to better situate their current and proposed policies towards extraction.
Bolivian Policy
Bolivia’s approach to the mining of lithium ion is entirely state led, since as per their 2009 constitution, “the country’s natural resources belong to the Bolivian people and must be administered in their collective interest by the state (North American Congress on Latin America). The government has been very selective with which company can enter a joint venture with the state-run company, Yacimientos de Litio Bolivianos (YLB), and extract the ore. Foreign companies must commit to a list of demands including: respecting nature, teaching Bolivians technical knowhow, a consultation process with local governments, recognition of indigenous groups, and giving a 51% share of the profits to the Bolivian government.
Fed up with the export-driven economic model, Bolivia seeks to process, refine, and “industrialize” the resource, so that it can create products higher up the value chain with Bolivian battery plants and car factories, rather than just export the ore (North American Congress on Latin America). The higher wages and technical expertise would help the country benefit from the resource rather than being further exploited. In fact, similar efforts to take advantage of the Lithium boom and produce “value-added products” can be seen in Zimbabwe in its recent export ban of the ore.
However, this approach has led Bolivia to be shunned by many foreign companies. While most of the world’s reserves of Lithium fall within the country, its government-run pilot plant produced less than 2% Chilean production in 2017 (Energy Transition). In the past few years agreements between Bolivia and Brazil, China, Japan, South Korea, France, and German company ACI Systems have all fallen through. The deal with ACI was struck down by Morales in response to a Potosi Civil Committee protest decrying that the deal for swinging too heavily in favor of the foreign company and not enough in the favor of local people (Society for Cultural Anthropology). At the same time, there have been claims by other actors that the “‘permanent spaces’ for citizen participation and control within State-owned companies”, or consultation process guaranteed by both the new constitution and 2013’s Law 341 on Citizen Participation and Control, has been ignored in the past by YLB and other times it was done merely for show, when planning the use of the Uyuni Salt Flat (International Work Group for Indigenous Affairs).
Thus, though Bolivia holds a huge supply of ore, it remains untapped, in comparison to its neighbors, with much smaller reserves. Bolivia’s heavily involved approach to the extraction of the ore and concerns about corruption has led the country to be shunned by many multinational companies that decry its attempts to ensure its people and land are not exploited. The demands by the Bolivian government have led to prolonged negotiations with several companies that have all fallen through. However, the country has recently reached an agreement with a Chinese company to extract the metal and promised to be manufacturing batteries by 2025 - though there is heavy skepticism within the country regarding these claims. There are also a further 5 companies the government is negotiating with from China, Russia, and the US. Though Bolivia looks poised to begin benefiting from the extraction of this resource, the process is also beset by concerns over the excessive amounts of groundwater the extraction and production processes use and how it will affect surrounding communities.
History
Bolivia’s state-driven approach to safeguarding its citizens and environment is not particularly surprising. Its recent history is characterized by an anti-neoliberal approach at the national level and an over shift to the political left, embodied by firebrand former President Evo Morales.
In the mid 1990s, the World Bank made loans conditional on the privatization of water. The Bolivian government was forced to privatize water by the World Bank starting in 1997 (Shultz). Contracted for the city of Cochabamba and its surrounding area included a number of companies, a US construction company being one of them (Hines). The company doubled rates overnight, and many now had to worry about the affordability of water in systems they themselves had built. Soon demonstrations broke out and protestors blocked streets and highways demanding a reverse of the new policies. The government met protestors with force and had armed units try to disperse crowds with bullets and tear gas. However, no matter what security forces did, the protests continued. In early 2000, the government was forced to relent and canceled the water privatization contract (Hines). The victory of local people in the “Water War” inspired many around the country for years to protest the residual privatization of water, in cases such as the “El Alto water revolt” and other facets of foreign control over Bolivian resources (Shultz). This momentum carried over to the following election, where the country’s neoliberal right wing was cast out in favor of the progressive Evo Morales.
These social mobilizations did not take place in isolation. At the same time, indigenous groups were asserting themselves politically, Evo’s cocaleros (impoverished coca plant farmers) were united in opposition to the US DEA’s aggressive, heavy-handed, and undemocratic anti-coca plant measures, and a wider regional shift to the political left buoyed his Presidential bid (Gamarra). In 2005, Evo rode these social mobilizations and anger against corruption and with the neoliberal status quo into the Bolivian Presidency. His Presidency marked a turning point and Bolivia reasserted its independence. Under him, the country’s industries were nationalized, and a new constitution protecting the environment and indigenous groups was created.
The new plurinational state focused on redistributing wealth and social support. Evo was anti-neocolonial and thus anti-US. Though he became embattled in the late 2010s, with his controversial bid for a third term and allegations of a CIA coup, his legacy continues to thrive, with his MAS party still holding power today. In this light, the government’s wariness of private companies and demands for local consultation, profit sharing, and battery production technology are an extension of a wider domestic political trend.
Chilean Policy
Chile, on the other hand, is a much more embattled case, with a policy that ebbs and flows depending on which administration is in power. In contrast to Bolivia, the country’s resource policy used to be strongly neoliberal and its extraction infrastructure modern, making it the top lithium provider in the world for a time. Due to constitutional restrictions, the government was legally not allowed to intervene in the market. However, the state has mandated that companies pay royalties to local governments, meet environmental and social measures, and recognize local indigenous communities. Yet some indigenous communities within the Atacamas desert never see their payments. The national government is prioritizing lithium production, investing in middle term value-adding activities. As said by Andrés Díaz, director the Center for Energy and Sustainable Development at Diego Portales University, “For us, it doesn't make any sense to export lithium and then buy from other countries batteries with a material that we produced at the very beginning (Otis).” In the spirit of this, the Chilean government has signed an agreement with one of the mining companies operating within the country, Albemarle; the agreement stipulates that the Chilean government will spend $300 million on research and development to have battery production start in the country by 2043.
Chile has historically had few regulations for companies, due to neoliberal policy, and this was no different from 2010-2014, under conservative President Sebastian Piñera. The then-President slashed regulations in a bid to incentivize private companies to increase lithium extraction and regain the leading position Chile had formerly had in lithium production (at this time, Australia led the world in lithium ore extraction). However, this policy was seen as ineffective.
During the second tenure of left-wing President Michelle Bachelet, the country tried a different approach. In 2014, she created the National Commission on Lithium, with representation from government institutions, Chilean and international experts, and local communities in the Atacamas. In 2015, the commission published its recommendations for the government, which involved a strengthening of environmental regulations and state power in negotiations. They argued that the state owned the resources in its own land, not foreign actors, and had a right to gain royalties from the companies extracting them in its territory. This was to be done through seeking new “public–private alliances” as well as the creation of a state-run mining company. With these findings, contracts with companies were renegotiated and a state-run lithium company, MSB, was created. Under the next Presidency, the second tenure of Piñera, contracts were MSB’s joint contracts and overall operations were expanded.
Thus, historically, Chile’s resource policy has been “very neoliberal,” relying entirely on foreign actors to extract resources in enormous quantities, in exchange for fewer environmental regulations and government oversight. However, starting in 2014, the government under left wing tenure took a keen interest in both increasing environmental protections, the role of the state in the industry, and developing value-added products. Recently, current President Gabriel Boric announced plans to nationalize the entire lithium industry. Following moves by Mexico and Indonesia to either nationalize the resource or ban its export he said “this is the best chance we have at transitioning to a sustainable and developed economy. We can't afford to waste it” (Reuters). Going forward, the government will only negotiate further public-private partnerships.
History
Though the nationalization of lithium came as a shock to many, it is not altogether surprising in the context of Chilean politics. In 1973, general Augusto Pinochet launched a CIA-backed coup and deposed then-President Salvador Allende. Allende had been the first democratically elected socialist President and had moved to fill the wishes of his constituents. Allende expropriated American copper companies operating in Chile without compensation, increased government stake in the mining and manufacturing sectors, nationalized some agricultural land, boosted wages, and froze prices. However, these policies also led to the government running out of reserve money, strikes, spikes in inflation, food shortages, and a general political polarization. It was in this backdrop, and the wider Cold War context (Allende’s government had strong relations with Cuba and was openly socialist), that the CIA provided resources for Augusto Pinochet to launch a military coup and take power.
Under the Brutal dictatorship of Pinochet, 130,000 leftists were detained with many being tortured and “disappeared” (Britannica). Neoliberal policies were implemented under the tutelage of Milton Friedman's “Chicago Boys” to address the state of the economy, and while these policies did improve it, they led to a severe recession in 1980. The result was after his rule formally ended, Chile’s national companies had all been sold off, regulations thrown out the window, and social protections minimized. Elite and popular opinion was solidly anti-Pinochet by 1988, and according to a plebiscite, the dictator stepped down in 1990 to become a senator for life. Though he had formally left power, his constitution remained in place, allocating a sizable number of seats in the new national assembly to the military, outlawing state control of industries, and ignoring indigenous communities, among other measures.
Following months of protests in 2019 in response to metro fare hikes, the people turned to demanding an end to the Pinochet constitution. then-President Pinera bowed to this pressure and the old constitution was scrapped. Though the first, progressive, draft of the constitution (with protections for the environment, indigenous groups, and a state role in the market) failed to receive public support, left-wing President Gabriel Boric was elected. It was in the backdrop of this sudden turn to the left, that Chile first increased regulations on and then nationalized its lithium. It also explains the original private sector-led plan and subsequent public-private contentions that have recently existed in the company’s lithium policy.
Argentinian Policy
Argentina’s lithium policy is disjointed. Lithium policy is primarily crafted at a national and provincial level, creating a “piecemeal” approach. The effect of this is that some companies voluntarily offer to follow environmental measures or invest in local communities, others in which the companies only extract and export, and others in which companies antagonize local communities. Predictably, this has also made it much easier for foreign companies to exploit local communities.
An example is Canadian-Chilean company Minera Exar. Working with six indigenous communities, the company promised that each would receive annual revenues between $9,000 and $60,000. Testimonies by locals claim they have never received payment. In theory, each province and the Atacamas has control over mineral rights, but the lack of a formal negotiation process between communities and companies, leads to violations of these rights (Ahmed).
Argentina’s approach to lithium policy has historically been neoliberal and “business friendly”, as determined by President Manem in the 1990s (Dorn and Fernando). These policies were continued by more recent -progressive- Presidents such as the Kirchners and Mauricio Macri. Chiefly, the policies facilitate easy extraction without taking steps for further industrialization; this has led to the country becoming one of the three largest exporters of lithium. The country’s political instability, combined with its large debt also notably weakens its negotiating position with multinational mining companies.
With the launch of the 2004 National Mining Plan, mining became a “fundamental pillar” of the economy (Dorn and Gundermann). With the country’s huge debt in mind, the current President, Alberto Fernández, is focused on using lithium export profits to pay down the figure. Thus, battery production plans in the short and midterm are nonexistent. This has also led to conflicts over water rights, as companies presiding over the country’s many mining sites are increasingly claiming surrounding groundwater.
To date, conflicts with mining companies do occur but are the exception. Companies leverage temporary employment practices, access to information, and barriers to local participation to circumvent the local consultation process and keep protests minimal.
History
Argentina has escaped the mainstream left-right political struggles that characterize most other countries, with Peronism - established in the 1940s by populist President Peron - being the dominant political ideology today. Some claim Peronism to have fascist traits with its policies including central bank and company nationalizations, and welfare expansions.
The country has endured several recent high-profile corruption scandals. Polarization is also high, with Presidents from opposing parties dismantling most of the policies of previous Presidents, such as President Marci dismantling former-President Fernandez’s entire Venezuela policy. There has been infighting even within political parties. Though the government cycles between pro-business and populist administrations, mining policy has stayed consistent as the country’s debt problem has worsened. Argentina has defaulted on its debt nine times over the past 20 years; thus, it is not surprising the company strives for a profit maximizing policies in the mining sector.
Conclusion
The explosion in demand for lithium ore presents a lot of opportunities for Bolivia, Chile, and Argentina to invest in their countries and pursue sustainable growth. However, each country approaches its lithium policy in a unique way, one that is uniquely itself and in line with the socioeconomic and sociocultural movements that have preceded it. Overall, a comparison we can draw are increasing arguments against free-market, export-oriented policies, in favor of “managed” growth, a proactive state, interventionist practices, and the creation of value-added products.
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