Argentina holds one of the largest lithium reserves on the planet. According to the United States Geological Survey, the country’s measured and indicated resources exceed twenty million tonnes, placing it among the world’s top holders. The lithium is there, beneath the salt flats of the Puna highlands, in the provinces of Jujuy, Salta, and Catamarca, where it has been sitting for millions of years. It is not going anywhere.
And yet in 2024, Argentina produced roughly seventy-four thousand tonnes of lithium carbonate equivalent. Australia, with significantly smaller reserves, produced several times more and leads global output with around thirty-seven per cent of the total. Chile, whose Salar de Atacama is the crown jewel of brine-based lithium, holds second place with around twenty-three per cent. Argentina, for all its geological potential, sits in fourth, behind China as well.
The country projects a substantial improvement for 2025, with estimates pointing to some hundred and fifteen to hundred and thirty thousand tonnes of lithium carbonate equivalent, a seventy-five per cent jump over the previous year. There are seven operating plants. New projects are in the ramp-up phase. RIGI, the Large Investment Incentive Regime approved under the Milei government, promises to attract fresh capital. But the point is not whether Argentina will produce more lithium. It will. The point is why it produces so little relative to what it has, and why the gap with competitors persists despite an objective geological advantage.
The answer is not geological. It is institutional.
The Constitutional Problem
In 1994, Argentina’s constitutional reform introduced an article that seemed minor but had enormous consequences for natural resource policy: the provinces became the owners of subsoil resources. This means the lithium beneath a salt flat in Jujuy belongs to Jujuy, not to the national government. Lithium in Catamarca belongs to Catamarca. In Salta, to Salta.
In practice, this fragments the country’s lithium policy into as many policies as there are producing provinces. Each province has its own mining authority, its own regulatory framework, its own fiscal conditions, its own environmental assessment processes, and its own relationships with local communities. There is no national lithium policy. There are three provincial policies and a national government that can incentivise but cannot coordinate.
The contrast with Chile is instructive. Chile is a unitary state where lithium was declared a strategic mineral in 1979, not subject to conventional mining concessions. The state controls the resource at the national level. When the Boric government announced its National Lithium Strategy in 2023 and negotiated the partnership between state-owned Codelco and SQM to exploit the Salar de Atacama through 2060, it did so with the authority of a central government that decides on its natural resources without needing to consult governors. The Chilean model has its own problems, among them an excess of state intervention that may discourage investment and production quotas that are a regulatory anachronism. But it has something Argentina does not: a strategy.
Australia, the world’s largest producer, operates under a different model. Its lithium comes from hard rock, not brine, which allows faster production cycles. Australia has a federal system, like Argentina, but with more stable institutions, a more predictable judiciary, and a bureaucracy that functions. Companies investing in Western Australia know with reasonable certainty what the rules will be in five or ten years. In Argentina, that certainty does not exist.
Three Provinces, Three Worlds
Jujuy, Salta, and Catamarca are the three lithium provinces. They share geography, share the salt flats, sometimes share the same salt flat, like the Hombre Muerto, which straddles Catamarca and Salta. But they do not share mining policy.
Jujuy was historically the most active. The provincial state company JEMSE participated as a minority partner in the Olaroz project. Then-governor Gerardo Morales pushed a provincial constitutional reform in 2023 aimed at facilitating mining activity, which triggered mass protests from indigenous communities and social organisations. Catamarca kept a lower profile but hosts the country’s oldest project, the Salar del Hombre Muerto, operated by Arcadium Lithium. Salta, with enormous salt flats like Arizaro and Pozuelos, has the largest area under exploration but fewer projects in production.
The three provinces created a Lithium Roundtable in 2021 and signed an Interprovincial Treaty for the Lithium Mining Region, ratified by all three legislatures. The idea was to coordinate policies. In practice, coordination was limited. Each province continues to grant permits according to its own criteria, negotiate with companies according to its own fiscal needs, and manage relations with indigenous communities according to its own capacities, which are generally thin.
The result is a regulatory landscape where an investor wanting to operate in Argentina’s Lithium Triangle must deal with three separate jurisdictions, three sets of rules, three mining authorities, and three provincial political logics that do not necessarily align with each other or with the national government’s logic. An investor wanting to operate in Chile’s Salar de Atacama deals with one authority. In Australia, the system is more complex but the institutions are more reliable.
This is not an argument against federalism. It is the observation that Argentine federalism, as it actually functions, creates transaction costs its competitors do not have.
The Macro as Obstacle
But the institutional problem does not end with provincial fragmentation. There is a second factor with no equivalent in Chile or Australia: Argentina’s macroeconomic instability.
A lithium project is a long-term investment. From exploration to commercial production, five to ten years can pass. Investment amounts run to hundreds of millions of dollars. The return depends on volatile international prices and local operating costs denominated in pesos. For a company investing five hundred million dollars in a project maturing in 2030, the relevant question is not how much lithium is in the salt flat but what the rules of the game will look like in five years.
In Argentina, that question has no reliable answer. The country has had currency controls, capital controls, restrictions on dividend repatriation, export duties that change from one administration to the next, and until recently triple-digit inflation. RIGI, introduced as part of the Milei government’s Ley Bases, attempts to solve this by offering fiscal and exchange-rate stability for thirty years on investments exceeding two hundred million dollars. It is a step in the right direction. But an incentive regime is only as solid as the credibility of the government implementing it, and Argentina’s macroeconomic credibility, after decades of defaults, broken contracts, and rule changes, is not rebuilt with a single law.
Chile also carries political risk. Boric’s National Lithium Strategy was contested by the opposition, and centre-right candidate Evelyn Matthei promised to review the Codelco-SQM deal. But the magnitude of the risk is not comparable. Chile has an independent central bank, a stable currency, investment-grade sovereign debt, and a tradition of institutional continuity that Argentina does not. An investor putting money into Chile faces political risk. An investor putting money into Argentina faces existential risk.
The Missing Value Chain
There is a third problem, perhaps the most important in the long run: Argentina exports raw lithium. It does not produce cathodes, does not manufacture cells, does not assemble batteries. The lithium value chain has four principal links: extraction of lithium carbonate or hydroxide, production of active cathode and anode materials, cell manufacturing, and battery assembly. Argentina participates in the first. China dominates the remaining three, processing around sixty-five per cent of the world’s lithium and manufacturing more than seventy-five per cent of lithium-ion batteries.
This means Argentina extracts a non-renewable resource from its salt flats, exports it with minimal processing, and the value added is generated elsewhere. It is the classic curse of resource-rich countries: geology provides the raw material, industry takes it somewhere else.
Chile faces the same problem but at least has a strategy, however incipient and plagued with difficulties, to move in that direction. The Codelco-SQM partnership includes commitments to invest in local processing. Australia has developed domestic refining capacity. Argentina has nothing comparable. A salt flat in Catamarca producing fifteen or twenty thousand tonnes of lithium carbonate a year employs roughly two hundred and fifty people. The wealth it generates is real but limited: exports worth a few hundred million dollars, modest provincial royalties, minimal direct employment.
The most ambitious project in this direction was the pilot lithium battery plant Jujuy tried to develop with the Italian company SERI. It did not prosper. There were attempts to produce cells at laboratory scale in national universities. They did not scale up. Argentina has capable researchers and universities working on battery technology, but the distance between a university lab and a globally competitive industrial plant is vast.
The Competition Does Not Wait
While Argentina debates its internal problems, the world moves on. In 2025, an estimated two hundred thousand additional tonnes of lithium are expected to enter the global market, a significant portion from Africa, where countries like Zimbabwe have multiplied their output. China discovered a lithium belt stretching two thousand eight hundred kilometres across its western regions. In Germany, Neptune Energy announced in September 2025 the discovery of forty-three million tonnes of lithium in the Altmark region, which could reshape European supply and reduce dependence on the South American Lithium Triangle.
Demand will grow. Projections from S&P and Benchmark Mineral Intelligence estimate that by 2035, global lithium demand could triple 2024 levels, driven by electric vehicles and energy storage. There is room for everyone. But the room is not infinite, and the countries that establish reliable production capacity first will capture the long-term contracts that define the structure of the market.
Argentina has a window of opportunity that will not stay open for ever. Reserves do not depreciate, but competitive advantage does, because lithium’s relevance depends on an energy transition whose speed and direction no one can predict with certainty. If in fifteen years battery technology shifts to sodium, or if lithium extraction from unconventional sources becomes economically viable at scale, Argentina’s reserves will still be there but they will be worth less.
The Mechanics of Waste
What makes the Argentine case interesting is not the complaint, which would be easy and sterile, but the mechanics. Argentina does not waste its lithium advantage out of malice, corruption, or stupidity, though all three exist. It wastes it for structural reasons that are perfectly understandable and very hard to fix.
Provincial fragmentation is a product of Argentine federalism, which responds to a real political history and to power balances that cannot be ignored. The provinces will not cede control of their resources because an economist in Buenos Aires explains it would be more efficient. Macroeconomic instability is the product of decades of fiscal, monetary, and political mismanagement that cannot be corrected in a single presidential term. The absence of a value chain reflects Argentina’s deindustrialisation over the past forty years and the technological distance from Asian production centres.
Each of these problems has a theoretical solution. Interprovincial coordination can improve. The macro can stabilise. The value chain can be developed with the right incentives and enough time. But theoretical solutions require political conditions that Argentina rarely produces: consensus between levels of government, policy continuity across administrations, and institutional patience to wait for results that take a decade to materialise.
What remains is a paradox. Argentina has the resource the world needs, in quantities that could transform the economy of its northwestern provinces and generate the hard currency the country desperately requires. But between the resource and its exploitation lies a layer of institutional complexity that functions as a kind of friction, in the Clausewitzian sense: everything that in theory seems simple, in practice becomes difficult. The lithium is there. The investments come, slower than they should, but they come. Production grows. But the resource’s full potential, the distance between what Argentina could be and what it is as a lithium producer, remains enormous.
And that distance is not explained by geology. It is explained by politics.