Worth remembering that an entity of the Jujuy provincial government, JEMSE, was effectively free carried by Orocobre for an 8.5% ownership of the Olaroz project. The deal was that Orocobre would cover upfront JEMSE's contributions to capex and JEMSE would forego future profits equivalent to that amount of capex. So the provincial government already owns 8.5% of Olaroz.
Also worth remembering that Orocobre acquired Rio Tinto's Argentine boron operations at a time when Rio was seriously considering closing those operations down as not profitable and immaterial. By doing that Orocobre rescued the jobs of hundreds of workers in some of the poorest areas of Argentina. Later on Allkem was able to offload the boron operations as a going concern to a local company in exchange for more of the Olaroz salar which was another positive contribution Allkem has made to Argentina.
Thirdly Allkem when it was formed from the merger of Orocobre and Galaxy made a wilful decision to relocate its headquarters from Brisbane to Argentina in part for Martin MD and his team to work closely with the provincial authorities. That was a stated objective of the move (of course Martin MD was already based in Buenos Aires but up till then hq was in Brissie).
I have no issue with local people getting a share in the profits created from mining. I genuinely think projects like Olaroz benefit locals through job creation and infrastructure provision but that financial benefit to the community is also fair enough. However I think that Orocobre and then Allkem has already shown itself to be willing to cooperate with local people and authorities and that should count for something in any discussions on the matter.
More of a worry is the attitude that Pall Graves and Livent bring to the table. PG, as an ex-Goldman executive, has with little doubt demonstrated many times that he'd sell his mum for a lark and the fact they are setting up a front company as a tax dodge for the merged company clearly shows he intends to remain true to form (a scorpion just has to sting). So it will be interesting how Sal de Vida and Livent's existing operation in Argentina fare.
Of note is that Mexico has nationalised some lithium tenements on Gangfeng and there is chatter that Brazil might be starting to play hard-ball with Sigma on some of its lithium tenements. This come after the move by Chile to part-nationalise some of its lithium prospects. The general mood in South America seems to be to start nationalising lithium profits. Done badly, with Bolivia being the obvious example, this can kill the lithium sector in a country before it even gets going. However Argentina is clearly open for business for lithium production and the local authorities clipping the ticket should not kill what already is there. Actually the more that countries like Bolivia and Chile and Mali overplay their hands regarding the development of their lithium industries the better for companies operating in countries like Australia and Canada and Argentina.
AKE Price at posting:
$11.76 Sentiment: Hold Disclosure: Held
