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Montevideo, May 20th 2024 - 07:16 UTC



South American countries might form “lithium OPEC”

Tuesday, January 18th 2022 - 20:30 UTC
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Chile's future president Gabriel Boric's politics stance will make integration easier Chile's future president Gabriel Boric's politics stance will make integration easier

Developers in Argentina, Bolivia, Chile, and possibly Peru are evaluating the idea of creating an association of lithium-producing countries that will function like the mineral's OPEN for the region.

Prospects of such a development have gained momentum following Gabriel Boric's presidential victory in Chile, now that all governments will have similar leftwing ideologies.

Former Argentine Foreign Minister Felipe Solá has already discussed the idea with Bolivian authorities in March last year, it was reported. Lithium is essential for the production of batteries for electrical vehicles. “We are going to be very serious and we are going to collect the experience of Bolivia, debating among ourselves and then making decisions that hopefully we can implement together,” Solá said at the time.

Bolivia is the country with the largest lithium reserves in the world with 21 million tons, above the 14.8 million tons of Argentina and the 8.3 million tons of Chile. Outside the region, the countries that have the mineral are China and Australia.

Due to its status as a non-renewable resource and the strong growth in global demand due to the drive to create a greener economy, lithium has managed to remain stable in the face of fluctuations in international commodity prices. Due to the relevance of their deposits, Bolivia, Argentina and Chile could regulate the international market for this mineral, analysts foresee.

Ideological differences between Bolivia and Chile's outgoing President Sebastián Piñera have in fact kept such an alliance shelved for quite a while, but with Boric it could al resurface.

A recent telephone conversation between Boric and Bolivian President Luis Arce in addition to Boric's pro-Argentina stance regarding the South Atlantic may bring on substantial changes in foreign policies from the country which had been a model of capitalism in the past few decades. Hence, the idea of building a lithium-based integrating axis to play strongly in the global market.

Despite growing enthusiasm, Casa Rosada sources admitted the Constitutional reform of 1994 gave the provinces sovereignty over the resources of their territory. In this case, lithium is in Jujuy, which means a lithium OPEC should require Arce and Boric to negotiate with Governor Gerardo Morales, who is not from the same party as President Alberto Fernández, but from the opposition UCR which is merged into the Together for a Change (JxC) coalition.

Boric sources, on the other side, admitted such an integration plan was not to be ruled out, although it was too soon to tell, although the issue is already at the center of Chile's presidential transition agenda, after Piñera's recent decision to call for bids to award operating contracts to explore and produce 400 thousand tons of lithium for batteries, an initiative which has been challenged both by Congress and by the Constitutional Convention.

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