Recommendations to the foreign financiers of Argentina's lithium rush
To realise the energy transition, large quantities of minerals and metals such as lithium, cobalt and rare earth metals are needed. These raw materials are mainly extracted in countries in the global South, and unfortunately this is almost always accompanied by human rights violations and environmental destruction. Today – also in light of EU Raw Materials Week that is happening this week – Argentinian organisation FARN and Both ENDS publish a joint report on the extraction of lithium in Argentina.
How can we ensure that people and nature are not harmed by the extraction of raw materials for our energy transition? Is it wise to provide export support to companies entering this market? Using the Argentinian case, the report attempts to answer these and other obvious dilemmas surrounding the extraction of transition minerals. Marius Troost is one of the authors of the report and gives us some insight.
Why did FARN and Both ENDS decide this was an urgent matter to touch upon?
Marius: "Making the transition from fossil fuels to renewables is priority number one. Yet we tend to forget that our clean energy supply needs resources as well. These will also have to be extracted somewhere, bearing in mind that mining has a tremendous impact wherever it takes place. We are seeing an increased interest by businesses and governments in securing our so-called 'transition minerals', including interest by Export Credit Agencies (ECAs – see box) from the Global North. With this report, we show which governments and ECAs are already financing the lithium sector in Argentina and the impacts this has on people and environment. "
What is so damaging about lithium extraction?
"Lithium extraction requires tremendous amounts of water in places - like the salt flats - where water is extremely scarce. This comes at the cost of drinking water and agriculture. It also has severe impacts for the fragile ecosystems in the area. What's more, lithium mining in Argentina still has a very extractivist character and reinforces the unequal distribution of wealth and the unequal trade balance between North and South"
What is the main conclusion of the report?
"We are already seeing Export Credit Agencies move into the lithium sector in Argentina. Foreign companies active in the sector are supported to undertake their business activities. At this point it's the Canadian and the Korean ECAs, but we will surely see more interest in the future. Unfortunately, the communities of the High Andean wetlands where the lithium extraction is taking place, do not at all benefit. They only suffer the significant environmental impacts and human rights violations."
How can we turn the tide, what should be done internationally?
"First and foremost, the global North should look critically at its own energy and material consumption. I mean: replacing our entire fleet of petrol-powered cars with electric ones is simply not a realistic option, as resources like lithium are limited too and the extraction will come at the cost of communities in the global South. We should really also think about less cars, rather than alternative cars. At the same time, international businesses and governments should take care to guarantee environmental and human rights. They should carefully consult the local communities and respect their 'right to say no' to projects on their land."
Who should definitely read this report?
"The EU is currently working on finalising its Critical Raw Materials Act. And globally, businesses and ECAs are eager to move into the raw materials space. The report has practical recommendations on how to go about this – we hope it will help them make informed policies that use a human rights and environment centred approach."
Export Credit Agencies and Investment Insurance Agencies, commonly known as ECAs, are public agencies that provide government-backed loans, guarantees, credits and insurance to private corporations from their home country.
ECAs make it easier for those corporations to do business abroad, particularly in the financially and politically risky developing world. Most industrialised nations have at least one ECA, which is usually an official or quasi-official branch of their government.
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