Lithium

Lithium Mining, Formulaic Reporting, and The Washington Post

Missing the fact that governments, not mining companies, are the real villains

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LithiumMiningKseniyaRagozinaDreamtimes
Kseniya Ragozina/Dreamtimes

First, let's agree that governments around the world regularly screw indigenous peoples. The most frequent governmental screwing occurs when authorities take their land on the grounds that it has not been not properly registered and titled. Additionally, except for the United States, nearly every other government claims to own all mineral rights within its territory. Consequently, royalties from mining concessions awarded by governments go to, yes, the governments. The upshot is that indigenous communities get screwed again when they have to endure the downsides of mining that takes place where they live while receiving none of the benefits that royalties would provide since those monies are diverted into government agencies headquartered far away.

Why am I going on about this? Because The Washington Post could have usefully made these observations in its story, "Tossed Aside in the 'White Gold' Rush: Indigenous people are left poor as tech world takes lithium from under their feet." The article details how various mining companies are beginning to exploit lithium deposits in Argentina's far northwestern province of Jujuy. The indigenous folks who dwell and herd llamas and goats in those remote Andean valleys happen to live next to giant salt flats that contain millions of tons of lithium. Lithium, of course, is the main element in the batteries that supply electricity to our mobile phones, computers, and electric cars.

The main complaint of the article is that besides new relatively high paying jobs and some minor financial assistance with community projects, the international mining companies that are making millions mining lithium are not sharing much of the proceeds with local communities. Basically, The Post casts the mining companies and the high tech companies that use Argentinian lithium in their products as the villains. Certainly, some of the local Atacama people are pissed off because they feel insufficiently consulted and rewarded. And that's fine. But the real villains are the national and provincial governments that take the royalties and taxes and then do not use them to provide adequate services to their citizens who live in the region.

In a single off-hand observation, The Post reporters do note, "The Atacamas' ability to share in the lithium profits is compromised by complex mineral rights — in Argentina, the provincial government owns them." Well, yes. They also observe that Jujuy, the province in which the lithium salt flats are located, has "started formalizing land titles for indigenous communities in 2003, making it one of the first provinces to do so." This form of communal property right empowers village leaders to negotiate and sign contracts on behalf of all of the members of their communities. If local leaders make a mistake or are themselves corrupt, then the whole community suffers.

Under Argentinian law mineral rights belong to the country's provinces which "cannot impose royalties exceeding 3 percent of the mine mouth value of the extracted minerals." In addition, the central government imposes a 35 percent corporate income tax and an export tax of 5 to 10 percent on profits derived from the sale of minerals. The provincial and central governments could use those monies to provide services to the communities where the mining is taking place. [For comparison, hardrock royalty rates for leases on state-owned lands in the western U.S. range from 1.25 percent (Arizona) to 10 percent (California) of the gross value of the minerals mined.]

A local group near the salt flats hired a lawyer Jorge Iglesias to oppose the mining. As The Post reports, Iglesias went to "court in 2014 to contest the government's approval of the lithium mines, claiming 'irreparable irregularities' in the approval process and arguing the local communities were not properly notified about the process. The court dismissed the lawsuit last year." The Post then quotes Iglesias: "The mining never should have been approved. We think they are taking advantage of the ignorance of the indigenous people on this subject." The "they" – the real villains – who took advantage of the locals certainly include Argentinian government officials eager to obtain royalties and taxes for their preferred programs.

Of course, corporations can and do misbehave, but it would have been more useful for The Post to report on the much larger problem that enables the exploitation and abuse of indigenous communities around the world: a lack of secure private property rights.