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ECONOMY | 02-10-2023 11:57

Argentina seeks to tax lithium boom to avoid region’s resource curse

Provincial and federal officials want to tap the profits of lithium companies with an annual tax that would be put toward building infrastructure.

Argentina is pushing to levy a new tax on lithium producers and make them hold back some production for national battery projects.

Provincial and federal officials want to tap the profits of lithium companies with an annual tax that would be put toward building infrastructure. They’re also proposing a quota of up to 20 percent of output to be kept for domestic battery projects.

Argentine leaders have been keen to avoid yet another resource curse in a region that has been unearthing raw materials for centuries while remaining relatively poor. Taxes and meddling in exports have held back Argentina’s other major commodities industries, farming and shale oil.

Governors of Argentina’s major lithium provinces — Jujuy, Salta and Catamarca — met Thursday with federal Mining Undersecretary Fernanda Ávila to discuss the measures, according to a statement from Ávila’s office. The quota would be discussed with each producer, rather than being a blanket policy, the office said.

The South American nation is the world’s fastest-growing producer of lithium, a key component in batteries needed for the global transition to cleaner energy. Investors from the United Kingdom to South Korea have flocked to Argentina, skirting hurdles in its neighbours in South America’s so-called lithium triangle, Chile and Bolivia.

Any proposals could be quickly scrapped with a change in government. Argentines vote in presidential elections on October 22. Opposition candidates Javier Milei and Patricia Bullrich, both of whom gained momentum in a primary vote last month, promise to deregulate the economy.

 

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by Jonathan Gilbert, Bloomberg

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