US, Argentina to sign MOU to boost critical mineral supply chains

The US and Argentina are expected to sign a memorandum of understanding concerning critical minerals Aug. 22 as the US continues efforts to boost supply chains outside of China, the State Department said Aug. 21.

The partnership comes as Jose Fernandez, under secretary for economic growth, energy and the environment will travel to Argentina, Ecuador and Peru from Aug. 21-29 to "engage key partners in the Western Hemisphere on critical minerals supply chains and developments in the Americas Partnership for Economic Prosperity, and to promote trade and economic opportunities with the United States," the State Department said.

Argentina produced 54,303 metric tons of lithium in 2023, accounting for about 5% of global production last year, according to estimates from S&P Global Market Intelligence. However, the country has vast resources of lithium and copper that remain untapped.

Lithium production is expected to increase significantly as projects worth an estimated total of $7 billion are developed by global miner Rio Tinto, Arcadium Lithium (a merger of Australia's Alkem and US' Livent), South Korea's Posco, China's Ganfeng Lithium, Canada's Lithium Americas and junior companies including Argentina Lithium & Energy. This latter, backed by carmaker Stellantis, has four projects in the southern cone nation, two approaching production stage.

Argentina is seen as an attractive market for investment in the Lithium Triangle as it charges a 3% net smelter royalty paid by lithium producers, cheaper than equivalent charges in Chile and Bolivia.

It also has favorable lithium mining regulations, despite the nation's uncertain economic health. However, neo-liberal President Javier Milei is taking steps to curb inflation and promote investment, which could further alleviate foreign investors' concerns.

While the agreement with Argentina will allow it better access to the US-lead Minerals Security Partnership, which includes 14 countries and the EU in an effort to catalyze public and private investment in responsible critical minerals supply chains globally, Argentina remains ineligible to qualify for incentives under the US Inflation Reduction Act as it does not have a free trade agreement with the US.