Tuesday, July 7, 2020

ECONOMY | 23-03-2019 09:32

Lithium and shale, the niches immune from crisis

The extraction of non-renewable natural resources encouraged by foreign investment make Neuquén and Jujuy the two ‘island’ provinces best coping with crisis.

The Vaca Muerta shale boom and the promise of lithium in the Puna Andean plateau helped to turn those two provinces into the only ones that created registered jobs throughout 2018, with employment growth rates of 6.2 and 2.4 percent for Neuquén and Jujuy registered respectively.

These figures released by the Federal Investment Agency show that the two big winners of the “‘M model’ of the 2015- 2019 Mauricio Macri presidency are oil and gas, with earnings of US$55 billion, and mining, with US$12.7 billion, both featuring high levels of formal employment.

“Neuquén is an island,” confirmed provincial Production Minister Facundo López Raggi. “Vaca Muerta is the basic factor driving all development, creating 7,000 jobs in 2018, including 1,500 in construction, since there is a big demand for housing and therefore much real estate investment.”

Neuquén’s data are striking amid the recession in the rest of the country. The third quarter of 2018 registered a provincial growth rate of 3.7 percent as against a 3.1-percent contraction at national level, according to Economía y Regiones consultancy firm, attracting investments of around US$20.8 billion over the last three years.

As a result there is a demographic explosion too, with around 28 families moving in every day. In line with this demand the built-up surface grew last year by over 580,000 square metres – the equivalent of 5,500 duplex of 90 square metres each. Employment in the construction sector grew 14 percent year-on-year, while falling 2.3 percent at national level.

Sebastián Cortez, the manager of Business Chamber of the Petroleum and Allied Industries of Neuquén (CEIPA), is also optimistic: “We´re all working well. There is trickle-down when the investments arrive on a massive scale. First come the big operators owning the concessions and then the other majors in the services and also smaller firms.”

The only cloud is the fruitproducing sector, mostly pears and apples, which is suffering the consequences of the crisis according to the Production Ministry.

“Jujuy spearheads the transformation of Argentina,” President Mauricio Macri told the Lithium Competitiveness Panel alongside Governor Gerardo Morales while on a visit to the province. Both leaders praised the investments in renewable energy such as the Cauchari solar park, the highest in the world.

But Jujuy’s crown jewel is the “white gold,” as they call the mineral used to make the batteries for cell phones and for the electronic cars which will be protagonists in the near future. According to Morales, almost US$2 billion was invested in the province’s lithium industry in 2018.

Yet the contrasts in Jujuy are more marked. Carlos Carrion, president of the province´s Industrial Union, commented: “The main sectors like sugar and ethanol are badly hit, as is retail trade. Some factories are closing down and others laying off their employees.”

* In the last three years Neuquén has drawn investments of over $20 billion while some 28 families move to the province daily. In 2018, some 7,000 registered jobs were created in the private sector.

* Jujuy received investments of US$2 billion in 2018 to exploit lithium, whose price has risen from US$4,000 a ton to US$14,000 over the past few years. The provincial company Jemse owns 35,000 hectares with good prospects of containing lithium.

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Manuel Nieto

Manuel Nieto

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