Possible U.S.-Argentina Lithium Agreement: A Socio-Environmental Opportunity

The Milei administration is seeking to accelerate the extraction of this key raw material used in the production of electric vehicles. CEDHA believes this is an opportunity to include principles that ensure social and environmental justice and to move forward with a green certification for the sector.

The United States has a strong interest in Argentine lithium. With limited reserves of this metal in its own territory, the U.S. will be forced to import it to meet the enormous demand that will arise from the production of electric vehicles and stationary batteries.

Argentina’s new president, Javier Milei, hopes to take advantage of this moment to sign a special agreement with the U.S. on critical minerals. This negotiation could serve as an opportunity to incorporate socio-environmental principles that guarantee social and environmental justice within the lithium supply chain.

An Urgent Need for the U.S.

In 2022, the Biden administration passed the Inflation Reduction Act (IRA), which aims to boost the electric vehicle industry through tax credits and subsidies.

However, the law includes certain restrictions regarding the origin of raw materials and components used to manufacture these vehicles. For example, imports from China and Russia are excluded from those benefits.

The law also states that trade should be conducted with countries that have a bilateral or free trade agreement with the U.S.—which is not the case for Argentina.

Nevertheless, in March 2023, the U.S. Treasury eased this restriction and now allows the electric vehicle industry to import critical raw materials from countries without a free trade agreement, provided a special agreement is signed between presidents.

President Javier Milei has already shown signs of moving in this direction. His first nod came in the form of praise for businessman Elon Musk. Beyond his satellite internet service, Starlink, Musk is the largest electric vehicle manufacturer in the U.S. through his company, Tesla.

Additionally, the first U.S. delegation to visit Milei in Argentina was led by Energy Secretary Jennifer Granholm. The main topic on the agenda was the energy transition, in which lithium plays a key role.

According to early statements from Argentina’s National Mining Secretariat, led by Flavia Royón, one of the government’s goals is to increase lithium production through an agreement with the U.S. The country currently produces 45,000 tons annually and aims to reach 250,000 tons by the end of 2024.

A Socio-Environmental Opportunity

The Center for Human Rights and Environment (CEDHA) believes this potential agreement between Argentina and the U.S. is an opportunity to ensure environmental and social justice in the lithium supply chain—without hindering sector growth or Argentina’s ability to help accelerate the global energy transition.

As basic principles, CEDHA maintains that the agreement should:

Acknowledge each country’s obligation to effectively enforce its environmental and labor legislation.
Ensure that these standards and policies promote the highest levels of environmental and labor protection.
Treat lithium as a climate mineral—one that contributes to fighting global warming.
Ensure that the supply of this resource is sustainable and equitable, and managed in an environmentally responsible way, especially with regard to water resources.

Among other specific environmental considerations that should be included in the agreement:

Prevention, reduction, and/or control of pollutant discharges and emissions.
Regulation of toxic or hazardous chemicals and waste.
Protection of wildlife, including endangered species, their habitats, and specially protected natural areas.
Sustainable water management in mining zones.

Not only should lithium and other critical mineral extraction processes be improved, but every stage of the value chain as well. Countries should commit to improving the life cycle of these minerals through longer-lasting products, more efficient material usage, and recycling strategies.

To ensure these environmental principles within the lithium supply chain, it would be important to establish a transparent traceability system throughout the extraction and processing stages up to export—a kind of green certification.

In terms of social justice, an obvious but essential point the signatory countries should make explicit in the agreement is the prohibition of forced and child labor.

Additionally, it is vital to recognize the importance of consulting local communities and provincial governments in all decision-making processes.