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public private partnerships
Chilean President Unveils Plan to Slowly Nationalize Lithium Industry
While striving for "a sustainable and developed economy," the leftist leader must contend with legislative divisions, potential industry opposition, and Indigenous and environmental resistance to large-scale mining.
Apr 21, 2023
Leftist Chilean President Gabriel Boric on Thursday announced plans to slowly nationalize the country's lithium industry, aiming to take advantage of massive reserves of the metal, key to electric vehicle batteries and other technology, while protecting the environment.
"Today we present a national lithium strategy that's technically solid and ambitious," Boric declared during a televised address, outlining his plan—which needs congressional approval—to create "a Chile that distributes wealth we all generate in a more just way."
"This is the best chance we have at transitioning to a sustainable and developed economy," he argued. "We can't afford to waste it."
Reutersreported that "Boric said the country would look to protect biodiversity and share mining benefits with Indigenous and surrounding communities."
About 60% of the world's reserves are located in the South American "lithium triangle," which includes Bolivia (21 million tons), Argentina (19.3 million tons), and Chile (9.6 million tons), according to the U.S. Geological Survey. For now, Chile is leading those nations in terms of production and ranked second globally last year, after Australia.
\u201cGood move by Chile. Lithium extraction should benefit the people of Chile before major mining companies. https://t.co/g569F4Uzwh\u201d— Paris Marx (@Paris Marx) 1682078541
Currently, Chile's lithium operations are limited to the Chilean company SQM and the U.S. firm Albemarle. Under Boric's plan, the government would respect existing contracts with those industry giants—set to expire in 2030 and 2043, respectively.
However, all future contracts for the metal will involve government-controlled public-private partnerships, Boric explained. He ultimately envisions a national company focused on lithium, but because creating one could be delayed by legislative divisions, agreements will initially be led by the state-owned copper mining company, Codelco.
According toThe Associated Press, "Boric said that in addition to being involved in mining, the government will promote the development of lithium products with added value, with the goal of becoming the world's leading lithium producer."
As the AP pointed out:
The minister of mining, Marcela Hernando, recently told Congress that the government cannot advance alone in the exploitation of lithium because "technology and knowledge are in private industry."
A public-private partnership is needed, Hernando said, though he added that "the state is the owner of lithium," which is an "uncompromisable" position of the government.
Boric's plan is part of a global trend. Mexican lawmakers voted last year to make lithium reserves federal property. Additionally, as the Financial Timesnoted, "Zimbabwe banned unprocessed lithium exports" and "Indonesia is curbing exports of commodities including nickel ore, which is used in batteries."
\u201cThis is the way.\u201d— Aja Barber (@Aja Barber) 1682088859
Thea Riofrancos—an Andrew Carnegie fellow, Providence College associate professor of political science, and Climate and Community Project member—tweeted Friday that resource nationalism is "all the rage" in the "Global South (Mexico, Indonesia, Bolivia) and North ('critical minerals' securitization) albeit from very distinct geoeconomic positions. But there's more to this."
"Boric situates this decision in the long sweep of Chilean history," referencing former President Salvador Allende's nationalization of copper, Riofrancos explained. "But this isn't a classic expropriation," because of the public-private partnership approach.
"Evidence from Latin America's Pink Tide era shows such partnerships can increase state revenues, which can fund social services and public infrastructure. But whether tech transfer and value chain upgrading occur is an open question," she said. "Boric flags both as crucial to his vision."
Riofrancos continued:
Just as importantly, and compared to both mid-century and Pink Tide era nationalizations, Boric cannot ignore the powerful wave of Indigenous and environmental resistance to large-scale mining in Chile and the region, nor the scientific evidence of damage to salt flat ecosystems.
Boric promises environmentally friendly extraction and conservation of 30% of Chile's salt flats (the location of lithium deposits), and promises a new model of public participation, including the first step [of] direct dialogue with representatives of Indigenous communities.
But these goals are in tension with his other key goal, which is to vastly expand lithium extraction in Chile's deserts as well as restore Chile to the position of top producer, a status now occupied by Australia (worth noting Argentina may soon overtake Chile for second place).
"And of course," she added, "all of these plans are subject to congressional approval and what I imagine will be a flurry of lobbying from the incumbent producers, SQM and Albemarle."
While Albemarle said that the development would have "no material impact on our business," Bloomberg highlighted that "SQM and Albemarle shares were down 7% and 4%, respectively, before the start of regular trading in New York on Friday."
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Down With Public-Private Partnerships. Up With a Future That Is Public
From escalating costs for the stretched public sector to environmental and social impacts, we found time and again that communities had been ignored, displaced, and had their basic rights violated by thoughtless projects designed and implemented in the pursuit of profit.
Feb 05, 2023
Last month, we joined more than 1000 representatives from all sectors of civil society who came together in Santiago de Chile to debate the future of – and threats to – public services the world over.
Participants discussed the chronic underfunding which continues to drive economic inequality, injustice and austerity, and the neocolonial policies that maintain the status quo.
Today those debates have resulted in the launch of “Our Future is Public: The Santiago Declaration for Public Services” – a momentous agreement signed by more than 200 organisations vowing to work to “transform our systems, valuing human rights and ecological sustainability over GDP growth and narrowly defined economic gains.”
One of the most damaging initiatives that has deeply affected the delivery of public services and infrastructure projects on all continents is the rise of public-private partnerships, or PPPs.
They have long been promoted by institutions such as the World Bank as a silver bullet to close the so-called gap to finance investments in services and infrastructure. The premise is that the private sector can deliver these services more efficiently and to a higher standard than the public sector, despite extensive evidence to the contrary.
We lay the pitfalls of PPPs bare in our new report History RePPPeated II: Why public-private partnerships are not the solution – the second in a series of investigations documenting the impacts of PPPs across Africa, Asia, Latin America and Europe.
Launched at the Santiago conference with some of the partners responsible for investigating and authoring the case studies, the report not only highlights negative impacts of PPPs, but sets out recommendations for how to better finance infrastructure and public services in the face of false solutions that have been proposed given the context of the current polycrisis.
These narratives wholly reflect red flags that are raised in the Santiago Declaration.
Through these investigations, we discovered failures on multiple levels in PPPs covering infrastructure such as roads and water supplies, as well as vital public services like healthcare and education.
From escalating costs for the stretched public sector to environmental and social impacts, we found time and again that communities had been ignored, displaced, and had their basic rights violated by thoughtless projects designed and implemented in the pursuit of profit.
A prime example is that of the the Melamchi Water Supply Project (MWSP) in Nepal. First announced nearly a quarter of a century ago, the project’s aim was to deliver clean, reliable and affordable water to 1.5 million people in Kathmandu.
And yet, 24 years later, residents are still waiting, while communities at the Melamchi water source are facing scarcity of water and eroded livelihoods. Instead of safe, clean drinking water – an internationally recognised human right – they have witnessed an extraordinary revolving door of private companies and institutional funders, including the World Bank, who have each failed to deliver.
To add to the MWSP’s colossal failure, 80 hectares of farmland have been lost to the project, a heavy blow to local residents, and up to 80 households have been forcibly displaced due to construction.
Who owns and controls our resources and public services became even more vitally important with the outbreak of the Covid pandemic in March 2020. Market-based models cannot be relied upon to deliver on human rights or the fight against inequalities as they are accountable only to their shareholders and not to their users.
This resulting focus on profit is overwhelmingly apparent in our case study from Liberia. Here, US firm Bridge International Academies (now NewGlobe) ‘abandoned’ its students and teachers during the height of the Covid-19 pandemic, shutting down schools and cutting teachers’ salaries by 80-90 per cent, despite being paid by the government.
And yet, in 2021 the Liberian government indefinitely extended the project, effectively subsidising a US for-profit firm at a cost that is at least double government spending on public schools.
In Peru, the Expressway Yellow Line has emerged as one of the most controversial projects ever carried out. This toll road was supposed to ease congestion issues in the capital city Lima, but instead toll rates have been unreasonably increased on at least eight occasions.
This generated almost $23 million for the private company involved and transpired with the complicity of public officials. Meanwhile, the Peruvian state suffered economic damages of US$1.2 million due to under the table negotiations between public officials and the private company, which led to the incorrect implementation and improper modifications of the contract years after it was initially signed.
Today, questions regarding the project and conflicts surrounding its implementation remain, while Lima residents’ expectations of quality road infrastructure to improve living conditions for those who have been most affected, continue to go unmet.
The human cost of the PPP projects showcased by History RePPPeated II is self-evident, but they are far from the exception. Rather they serve to illustrate common failures with the PPP model that risk compromising fundamental human rights and that undermine the fight against climate change and inequalities.
Their continuing promotion is one of the many reasons why we support the Santiago Declaration. Together with all its signatories, we will strengthen resistance to PPPs with their focus on private-led interests and promote public-public or public-common partnerships for a future that is public.
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