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EU nears critical-materials agreements with Argentina and Chile

18th May 2023

By: Bloomberg

  

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The European Union is working on deals with Argentina and Chile that will widen its access to critical minerals and metals such as lithium needed for electric-vehicle batteries as part of its goal of creating a less carbon-intensive economy.

Preliminary memorandums of understanding could be signed during the next four months, according to the European Commission, the EU’s executive arm, which added that further partnerships are possible in South America and beyond.

This is the latest effort by the EU to secure access to resources that are crucial for its clean-energy and digital transition, and to reduce its dependence on a handful of suppliers that include China. It follows agreements with Canada, Ukraine, Namibia and Kazakhstan. Brussels is also in talks with Norway and Greenland.

“The strategic partnerships will allow both sides to jointly develop investment projects on sustainable and resilient raw materials value chains, while specifically enhancing collaboration on research and innovation,” a commission spokeswoman said on Wednesday.

A spokesman for Argentina’s Energy Secretariat said the government is working on a memorandum with the EU to help the country sustainably develop its metals exploration and processing industries. According to a draft seen by Bloomberg, it covers 42 raw materials.

Demand for lithium, of which Argentina is a key provider, is expected to be 12 times greater by 2030 and 20 times higher by 2050. The EU has agreed to ban the sale of new cars emitting C02 by 2035 as it bets on electric vehicles.

The preliminary agreement will likely come ahead of Argentina’s presidential election in October, where the ruling Peronist coalition faces long odds and it isn’t clear what lithium policy a new government will implement.

South America’s second-largest economy is also seeking special status to qualify for benefits under the US Inflation Reduction Act, allowing its lithium to be used by US carmakers.

Chile is the world’s second-largest supplier of lithium after Australia and much of its output is currently processed by China, where costs are low. German Chancellor Olaf Scholz met with Chilean President Gabriel Boric in Santiago earlier this year in an effort to secure additional supplies.

Edited by Bloomberg

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