Sat. Apr 20th, 2024

Gas, oil, lithium, nuclear: the government of Argentine President Javier Milei has several assets in its game, but will have to manage them well.

< p>Argentina at the economic crossroads

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President Javier Milei wants to revive Argentina by relying on the country's energy and mining resources.

  • Jean-Michel Leprince (View profile)Jean-Michel Leprince

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In order to achieve its objective of balancing the budget at all costs and to move towards privatization of the country's economy, the government of Argentina has radically cut infrastructure spending, implementing pause of thousands of construction sites throughout the country.

This is the case of one of the most emblematic construction sites, the Nestor Kirchner gas pipeline, of great strategic importance for what it must bring in petrodollars.

Argentina is richer than we think, but will the government of new President Javier Milei be able to manage this wealth to get the country out of its debt situation?

With gas and shale oil from Vaca Muerta in Patagonia, Argentina is moving towards self-sufficiency, whereas it previously imported its gas from Bolivia. Now it is starting to export its resources to Brazil, Uruguay and Paraguay. The country has the second largest shale gas reserves in the world and the fourth largest oil reserves.

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In July 2023, the gas pipeline from the Vaca Muerta field arrived in Buenos Aires. It was inaugurated with great fanfare by the outgoing government of Peronists Alberto Fernandez, Cristina Kirchner and Sergio Massa.

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The La Plata refinery in Berisso, Argentina

M . Massa congratulated himself on not having listened to the advice of the International Monetary Fund (IMF), which holds Argentina's staggering debt, not to build the gas pipeline to save money. He had renationalized the YPF company which the new president, Javier Milei, is considering reprivatizing.

Environmentally, the region where the Vaca Muerta shale geological formation is located suffers all the ecological disadvantages of fracking.

Mapuche indigenous people complain of irreversible damage to their environment. One day oil and gas will be over, there will only be a polluted territory left. Ours, deplores Lorena Bravo, spokesperson for the Mapuche community of Campo Maripe.

Argentina, in its salt lakes located almost 4,000 meters above sea level in the Andes, shares with Chile and Bolivia the largest lithium reserves in the world. world.

Already, President Milei has aroused the interest of Tesla co-founder and CEO Elon Musk, one of his idols, in Argentine lithium. The industry is already privatized, while the subsoil is under provincial jurisdiction, which constitutes a subject of dispute between Buenos Aires and the provinces.

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Salt pans are an important source of lithium in Argentina.

Most lithium companies are foreign, either Australian, Chinese, European or Canadian. They pay very little royalties for the exploitation of the resource, only 8%, compared to 20 and 40% in Bolivia and Chile, tells us Camilo Palacios, engineer at the CIMED research institute in the province of Jujuy.

Raw lithium is exported without any processing. Not only is the alkali metal not transformed, but it pollutes.

In the indigenous village of Olaroz, in the Andes, gigantic lithium deposits are found deep in the Puna salt flats. The local residents refuse to speak to us, and we sense a sort of unease there. Many are employed by lithium-producing companies, while others oppose lithium mining because of its effects on their environment.

Lithium cannot be eaten, but water is drunk, denounces the president of the Santuario de Tres Pozos Kolla indigenous community, Veronica Chavez.

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“Water is life, not lithium”, we can read on this poster brandished by a protester on August 8, 2023, during a demonstration in Buenos Aires.

La Puna is the driest place in the world where quantities of water are wasted to extract, through evaporation, brine, lithium carbonate. Residues pollute the environment forever.

A quote from Camilo Palacios, engineer at CIMED

At CIMED, Camilo is developing a more economical and ecological way to exploit lithium, from extraction to battery recycling. He is working on an electrolysis process that would save water without chemicals and by recovering magnesium and borax residues.

Like many, he doubts President Javier Milei's interest in the environment, who has already been described as a climate skeptic.

And that's not all: Argentina is in the global race for modular nuclear reactors by 2030. It's no coincidence, says nuclear engineer Juan Ignacio Arroyo, it's the fruit of 70 years of research, design and operation of nuclear power plants, including one on Canada's CANDU model.

Juan Ignacio Arroyo has a positive vision of Argentina's energy and economic future: Vaca Muerta will play a very important role in solving the economic problems of Argentina. This will be a source of valuable dollars. There is reason to be optimistic. It’s as if we had suddenly reshuffled the cards for Argentina; the possibilities are excellent.

The card game, Javier Milei is beating it. The Argentine president leans towards excessive privatization, while the Argentine state has a long tradition, certainly excessive, of intervention in the economy.

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President Javier Milei during his electoral campaign

The night of his victory, Javier Milei said: We will adopt the model of freedom to become a world power again.

Yes, Argentina has already been a world power. The elegance of its capital, Buenos Aires, bears witness to this. The country remains an agricultural powerhouse that exports a lot of soy and beef. Javier Milei will have major new assets: gas, oil, lithium and nuclear energy.

Assets you shouldn't waste.

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