From Escazú to Environmental Action: Researcher Q&A

By Bridgette Lang

Lithium, an element used in rechargeable batteries and other sustainable energy sources, is in high demand as the green energy market grows. Though lithium products can help countries reduce their carbon footprint, its extraction process is quite far from being eco-friendly. Inevitably, governments and investors must make tradeoffs and difficult decisions.

In a new policy brief published in the Latin American Studies Association, Rebecca Ray, Kehan Wang and Zara C. Albright examine the history of mining in Latin America and how the future of lithium mining, in particular, may influence commitments to long-term sustainability. Core issues such as accountability and engagement are further complicated by the role of foreign investors. For the “Lithium Triangle” countries of Chile, Argentina and Bolivia, the authors argue developing rigorous local institutions will be necessary to set standards and to communicate clear expectations with incoming Chinese investors.

Below, Ray, Wang and Albright answer a series of questions based on their research and policy implications:

Q: Overall, Latin America has a long history of mining and foreign influence. Out of the many historical examples to choose from, how did you pick Peru, and what are the key similarities it shares with the Lithium Triangle countries today?

Kehan Wang (KW): We chose Peru because most of China’s involvement in Latin America’s extractive industry has been in Peru. Since 1992, China has been investing billions of dollars in Peru’s copper industry. We have these mega-projects with large environmental and social footprints, like Las Bambas, Toromocho, and Rio Blanco. Chinese investment in Peru is barely comparable to other Latin American countries. Also, in this process, Peru and the Chinese investors learn together about natural resource governance and also conflict management. We see there’s a learning curve happening in Peru with all these institutions growing, leading to the enhanced coordination between departments of the government. Even though there’s still a lot of loopholes, we see there’s an improvement from the side of the government.

Rebecca Ray (RR): It’s learning by doing. We see the co-evolution of investors and institutions developing standards as they go along. Because Peru has been a mining country for well over 500 years, even before the Spaniards arrived, it has been a long time coming, but since the most recent privatization under Alberto Fujimori [President of Peru from 1990 to 2000] and particularly in the minerals boom of the 2000s, institutions have had to grow and develop. Peru has had some of the world’s most ambitious reforms in this area. It’s a great example for Peru’s neighbors, who are also facing the same boom.

Q: Out of the countries you studied, what Lithium Triangle countries have taken the first few leaps in implementing the Escazú Agreement? Are some countries doing a better job thus far, and how can other countries learn from their example?

RR: The Escazú Agreement is a groundbreaking regional agreement that has three major parts to it. The first is establishing the right of the public to access environmental information on the quality of the air, water, and soil that they depend on. The second part is the right to participate in public decisions that will affect the environment. The third aspect is access to justice when the environment they rely on is being affected. There’s the ability to seek justice in those situations, regardless of whether or no private property was damaged. It’s very exciting to see it come into play, and I will be watching very closely to see how different nations in the region approach it. Of the Lithium Triangle countries, only Bolivia and Argentina have ratified the Escazú Agreement, which goes a step further and gives the agreement the strength of law. Both countries, particularly Bolivia, have long histories of extraction and the institution building in reaction to [extraction]. Local communities will want to make sure that their existing livelihoods are not damaged through contamination.

Zara Albright (ZA): This agreement just entered into force in April of 2021, so it’s only been enforced for almost four months. All of that time has been during the COVID-19 pandemic, so one of the real tests for the strength of this agreement is going to be how countries move forward coming out of this pandemic with new opportunities for development financing, specifically in the lithium sector. There’s a real opportunity right now coming out of this pandemic to institutionalize some of these rights, like access information, participation and justice in some of these new deals and investments.

One of the Lithium Triangle countries that has done service to the Escazú Agreement is Argentina’s Ministry of Environment and Sustainable Development. They have created this new online portal publishing data and reports related to environmental issues that are publicly available for anyone to go look at, and it has lots of quantitative data about greenhouse gases, monitoring national forests, biodiversity and protected areas in the country.

Q: Any construction or mining project involves consent from many parties. Specifically, with lithium mining where China and many Latin American countries are involved, it can be difficult to delegate liability in working with local populations. In your opinion, whose responsibility is it to initiate civil society participation?

ZA: To an extent, it’s the joint responsibility of Latin American governments and Chinese investors, but I think at a fundamental level the responsibility lies with Latin American governments. Governments are the jurisdictional authority in the area and, the countries, such as Argentina and Peru, all have domestic legal requirements for prior consultation. It’s up to the states to follow and enforce the laws that they have passed and conduct meaningful consultations with these communities. China is an outside investor and even though they are starting to have a history in the region, it’s only been 20 years. Foreign investors don’t have the deep contextual knowledge necessary to know who they need to be consulting and who are the important local stakeholders. It’s ultimately the states’ responsibility to assist the investors in identifying affected communities and ensure there’s an inclusive planning process.

RR: The truth is, when you’re dealing with international investors, they don’t necessarily know the local context. This leads us to the example of the Toromocho mine in Peru [being shut down due to pollution in 2014]. After it happened, the investors recognized that it was their fault. They cleaned it up, and they asked the government for help understanding how to better take into account the local rain and land conditions. The investors didn’t know the local conditions until it was too late, and ended up with much greater expense than they would have had to just comply with the local conditions to begin with. There is also a learning curve for institutions and how the government reaches out to investors to communicate with them and enforce laws onto them.

KW: In the developing world, Latin America already has the most rigorous safeguard system. Not all American countries do, but in Latin America accountability is [generally] better than other parts of the world. There are ramifications from that, too. First of all, there’s a steep learning curve for the Chinese investors, because operating domestically [in China], they were not used to this kind of accountability system. The decentralization of the decision-making process when projects are implemented [could be a helpful tool to the accountability system]. In Latin America, the decisions are made in the capital, in the Ministry of Energy and Mining, those kinds of organizations. With local decision making, there’s an audience and then, the local government that sort of deals with consultation and transparency measures. Still, there’s a space for policy innovation and how the central government coordinates with the local government and civil society. As a researcher, I’m excited to see what policy and institutional innovation comes out of this.

Q: In your policy brief, you call for more transparency in how projects are planned and implemented. What groups will benefit from increased transparency, and how will it help them in decision-making?

RR: Transparency means an opportunity to see and mitigate risks before they become potentially very costly for everyone involved, for the local communities whose lives and livelihoods are dependent on a clean environment, for the investors who will have to pay much more if they wait until it’s too late to address risk mitigation, and for governments who can prevent and mitigate conflict better with transparency. Think of the Toromocho project, if the information had been transparently presented, the project would have been built in a way that would be risk resilient to the local environment.

ZA: Everyone benefits, especially in the long term and in terms of examining decision making. These are complex decisions, and foreign investors may not have all the information that they need on the ground. Making decisions requires local knowledge. To make informed decisions and to get that local knowledge, there needs to be transparency in the goals of the project in the planning stages. Local actors, whether it’s Indigenous people who live in the area or the provincial government, have the knowledge they can contribute. Investors bring technical knowledge with them as well, so bringing together those different sources of knowledge is really important and will aid everyone.