Convergence, divergence or mixed results? A comparison between private and public regulations governing lithium mining in Argentina

The transition from fossil fuels to renewable energy relies on intensifying the extraction of critical battery materials such as lithium. The social and environmental impacts of this shift have raised concerns amongst local communities. In response, industries and local governments have increased regulations and accountability standards. But they have done so in an uncoordinated way: overlapping private and public-driven directives. The extent to which private transnational standards converge (or diverge) from public local regulations remains unexplored. This report contributes to closing this knowledge gap and analyzes the emergent ecosystem of environmental, social, and governance (ESG) regulations on lithium mining in Argentina.

This report is one of the expected outputs of “Accounting for the Extractivist Footprint of EVs: A Comparative Analysis of Local and Transnational ESG Standards Governing Lithium Production”, a project by Fundar, University of Toronto and INENCO-Conicet.

Lithium mining in Argentina

A rising demand for lithium

Electric vehicle (EV) sales are accelerating in the Global North. This is one of the most visible signs of a consumer-led transition from fossil fuels to renewable energy. The shift to EVs relies on intensifying global supply chains, beginning with the extraction of critical battery materials such as lithium. According to the World Bank, to meet projected battery storage demands, the production of lithium must surge by 500% by 2050. In this sense, the pursuit of critical battery minerals presents both a solution to and a significant challenge for an equitable energy transition.

Given its abundant natural resources, Latin America plays a pivotal role in this transition. 58% of the world’s identified lithium resources lie in the Lithium Triangle—Argentina, Bolivia, and Chile—.

However, affected communities have raised concerns about the environmental and social impacts of mining. In Argentina, attention has predominantly focused on issues related to water consumption and the adverse impacts of mining on human well-being and biodiversity. They have pointed to the insufficient involvement of locals in decision-making and the government’s active promotion of the lithium industry with inadequate access to current environmental information.

A rising amount of lithium and mining standards and regulations

To address these tensions, over the last decade, the battery supply chain has increased the amount of environmental, social, and governance (ESG) regulations and accountability standards.

Measures such as the Initiative for Responsible Mining Assurance (IRMA) and the Extractive Industry Transparency Initiative (EITI) have emerged. However, with few exceptions, this ecosystem of transnational standards has its limitations. Not only is it fragmented but also largely based on corporations’ voluntary adherence. Also, since requirements overlap, there is a risk of confusion amongst participating companies and regulators.

The proliferation of industry and government-driven guidelines raises the question of to which extent private transnational standards converge (or diverge) from public legislation.

International accountability mechanisms —like Environmental Impact Assessments and the principle of Free, Prior, and Informed Consent— have been legally established to ensure community engagement. However, these institution-building processes have often failed to meet their intended objectives fully. And there are gaps in the regulation of public participation both at the national and provincial levels.

There are several barriers to local participation, and consultation does not always comply with national laws and international treaties. The lack of clear guidelines for free, prior and informed consent (or FPIC) implementation led public agencies to develop participatory mechanisms in a discretionary manner, which in many cases affects the credibility of the process. In addition to generating mistrust, weak institutional capacity to uphold international principles becomes a risk for large investors.

Lithium Standards: an analysis report

The proliferation of industry and government-driven guidelines raises the question of to which extent private transnational standards converge or diverge from public legislation. This report examines the emergent ecosystem of ESG standards and regulations governing mining.

We address the following questions:

  • What are the accountability sources, targets and substance of public legislation and private transnational standards regarding Environmental Impact Assessment, public participation and Free, Prior and Informed Consultation (FPIC) in lithium mining?
  • How are private transnational standards and public regulation converging or diverging on those sources, targets and substances?

 

To do so, we compare Catamarca’s public regulations (a lithium-producing province in Argentina) and the Initiative for Responsible Mining Assurance Standard (IRMA), one of the most comprehensive standards in the world. We chose Catamarca’s legal framework as a reference because the first project going through the IRMA certification process in Argentina —the Fenix lithium project— is located there.

Key findings

The comparative analysis between IRMA Standard and Catamarca’s regulations shows mixed results. Convergence and divergence depend on the topic and the aspect of accountability we pay attention to.

The first thing to notice when comparing both sets of rules is that targets of accountability tend to (partially) converge, whilst sources of accountability tend to diverge. Both private and public guidelines require mining companies to account for similar actions to operate. However, when mining companies follow IRMA standards, they are controlled by independent auditors, whereas when they follow public rules, they are supervised by the government.

Public participation

Public regulation establishes mandatory specific participation instances -such as public hearings- before issuing any mining permit. The IRMA Standard establishes a much more comprehensive plan of public participation. It requires community engagement all along the mining process.

The sanctions for not complying with participation procedures are quite different. The IRMA’s sanction for not fulfilling the stakeholder engagement procedures harms scoring. The government’s penalty is failing to get an operating permit.

Environmental Impact Assessment (EIA)

IRMA certifies to which extent the company has complied with many of the requirements. However, other than denying certification or qualifying companies at lower levels, it does not count with enforcement mechanisms to shape the company’s environmental plan. Conversely, when the government assesses the Environmental Impact Report, it is empowered to require changes in the company’s environmental plan, as it is in charge of approving the mining project. And if the EIA report of the mining project is not approved, the company does not get an operating permit. This is a powerful tool to shape the company’s environmental plan and a great difference compared to IRMA.

Free, Prior and Informed Consultation (FPIC)

The biggest gap between public regulation and the standard is in Free, Prior and Informed Consultation. While IRMA explicitly requires Indigenous Peoples’ consent, domestic legislation requires only a consultation. Furthermore, IRMA explicitly states that the mining company will not get the certification if it does not obtain consent. In public regulations, the consequences of not carrying out the consultation (or carrying it out but not obtaining consent) are unclear. 

While IRMA standards state specific requirements when consulting Indigenous Peoples, public regulations lack FPIC-specific provisions. This not only implies uncertainty regarding consultation procedures but also about the consequences of failing to obtain a positive pronunciation from Indigenous People. 

Public policy recommendations

Community participation in Argentina (through EIA, public participation or FPIC) can not be taken for granted. Tensions and conflicts have emerged to denounce the absence of local involvement in decision-making. Therefore, some policy guidelines stand out from these results and can serve as input for addressing these tensions.

Free, Prior and Informed Consultation (FPIC)

Local government should cover gaps in legislation. Specifically, it is critical to regulate Free, Prior and Informed Consultation, granted by the ILO Convention 169. This requires establishing national processes for appropriate consultation procedures, as well as consequences for not fulfilling those procedural conditions and for fulfilling those conditions but not obtaining Indigenous Peoples’ consent. This gap may even be addressed by drafting a public regulation that establishes procedural provisions as a framework for protocols on how to develop FPIC for each mining project.

Public participation

Regarding public participation, the country could take initiatives from private regulations to make public participation more comprehensive. Argentine law already establishes meaningful instances of public participation: public hearings must be held for a mining company to obtain an operating permit. However, these instances end up being restricted by eligibility criteria for people to participate. We believe that public hearings should be wider, exceeding the accreditation of a direct interest.

Early public participation allows different perspectives and concerns to be raised at the initial stages of the mining project. This can influence future decisions, provide legitimacy and reduce potential conflict. In that regard, local government could establish the elaboration of an engagement plan in the early stages as a mandatory requirement to ensure participation throughout the mining process.

Environmental Impact Assessment (EIA)

Although the enforcement aspects were beyond the scope of this document, there is evidence to suspect that part of the problem lies in the enforcement of existing regulations. In this sense, Argentina should cover enforcement gaps where comprehensive legal frameworks already exist but are not fully enforced, such as the Environmental Impact Assessment procedures.

In summary

Both public and private guidelines tend to converge in terms of substance. They share similar concerns and develop similar requirements to address them. Thus, the main problem with lithium mining governance derives not from regulation but from gaps in its enforcement.

Serious consideration must be given to Free, Prior and Informed Consultation legal frameworks. IRMA Standard has comprehensive regulations but weak enforcement mechanisms. Local government, on the other hand, has powerful enforcement mechanisms but has not adopted a comprehensive regulation on this subject. Ensuring the FPIC can not rely exclusively on transnational standards (that lack implementation mechanisms), nor on public regulations (that suffer serious regulatory gaps).

The vagueness in the terms and procedures of government regulation undermines the decision-making process on lithium projects and threatens the representativeness of decisions to be taken on that issue. Public policy efforts must be oriented towards addressing this critical gap.

Since IRMA requires compliance with public legislation, the implementation of these recommendations could be additionally reinforced by the company’s goal of fulfilling the verification, resulting in a complementary relationship between the two frameworks.

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