Lithium Fever Comes to the Chaco
What will the "white gold" mean for Paraguay's native peoples?
Just a few minutes’ drive across the river from the capital, Asunción, begins the Chaco: a vast region that takes up 60 percent of Paraguay, but is home to just 2 percent of its population.
It’s one of South America’s most important ecosystems, providing a refuge to jaguars, maned wolves, and giant anteaters: as well as the Ayoreo Totobiegosode, the last “uncontacted” native people in the Americas outside of the Amazon.
They’re the guardians of unique biodiversity like the quebracho, a gnarled, spiky tree that locks carbon underground for centuries, and bleeds red sap as if from open veins.
But the Paraguayan Chaco also a punctured, plundered, and parcelled-up frontier.
The region lost more than four million hectares (40,000 square kilometres) of tree cover between 2005 and 2020, according to government data: an area the size of Switzerland. By 2022, another 360,000 hectares were lost: almost five square kilometres per day. The main driver of deforestation: the inexorable advance of agriculture and cattle ranching.
But the bulldozers and chainsaws are not only making way for cows and crops. A new threat now looms over, or rather underneath, the Chaco: lithium.
Dubbed the new “white gold” in the air-conditioned offices of far-off cities, huge reserves of the ultra-light mineral — essential to the rechargeable batteries used in cell phones, laptops, and electric vehicles — are thought to lie beneath the arid soil of Paraguay’s Chaco.
In a world desperately seeking solutions to the climate crisis, the Chaco is emerging as a major player in a “eco-friendly” future: even if this risks its own survival.
New commodity, old promises
Lithium mining elsewhere in South America has faced fierce criticism on environmental and social grounds.
Around half of global lithium reserves lie in the so-called Lithium Triangle that stretches between Chile, Bolivia and Argentina.
There, according to industry data, some 65 percent of local water supplies are used in evaporating the underground brines in which the element is typically found. Local Andean communities say the vegetation that feeds their animals is drying out and dying. Mining firms make huge profits, little of which stay in the country.
Yet lithium prospecting has come to the Chaco — currently reeling from years of drought — with remarkably little scrutiny. The pitches made by foreign companies to outside investors and Paraguay’s government, meanwhile, feature optimistic export projections, beguiling forecasts of rapid GDP growth, and seductive promises of development.
Take Chaco Minerals, a Canadian firm and self-described “leader in sustainable lithium mining in Paraguay.” Its representatives indicate they have paid just US$0.50 per hectare for their two million hectares of lithium claims across the Chaco, which they think could be “the world’s next great lithium producing region.”
Paraguay, they add, “boasts favorable geopolitical, financial, tax and security” arrangements: including repatriation of lithium mining profits without paying a single cent in tax.
Mario Abdo Benítez (2018-2023) and Santiago Peña (2023-2028) — both presidents belonging to the conservative Colorado Party — have tacitly declared open season for lithium mining in the Chaco.
An official register maintained by the Vice-Ministry of Mines and Energy indicates that 28 projects have been granted licences to prospect in areas thought to be rich in lithium, potassium, and similar minerals. Many are using geological data from exploration wells drilled by oil companies, some of them dating back decades.
Yet according to an investigation by Consenso, at least one of these concessions is on Indigenous land.
A prospection area approved by the Environment and Sustainable Development Ministry (MADES) for Valquiria Exploration S.A — a Paraguayan firm which shares a legal representative and environmental advisor with Chaco Minerals — falls within the PNCAT, a protected reserve recognised by the Inter-American Court of Human Rights as belonging to settled Ayoreo communities, and used by their nomadic relatives to hunt, forage, and find water.
Notably, the same concession has already been deforested by suppliers of Chortitzer, a wealthy Mennonite cooperative. Leather from cattle raised in the area, according to an investigation by Earthsight, lines luxury BMW and Jaguar Land Rover vehicles manufactured in Europe.
The Ayoreo Totobiegosode have lived in the Chaco for centuries, holding out against conquistadors, Mennonites, and missionaries. Could it finally be lithium mining that tips the fragile ecological balance, forcing them to leave their forest home?
Who benefits?
The under-the-radar lithium rush in the remotest corners of the Chaco provokes a broader question for the rest of the country. What benefit, if any, will Paraguayan citizens see from the auctioning of their natural resources for cents on the dollar?
Without efforts to generate a local industrialisation process — for example, producing lithium carbonate batteries — create dignified, long-term jobs, and raise more tax revenue from major foreign companies, the state will be reduced to a mere spectator. Paraguay will remain an exporter of raw resources without local added value, while the profits vanish amid the spreadsheets of the rich and powerful.
Many experts agree that lithium is part of the equation when it comes to greening the world’s energy supply. Chaco Minerals, for its part, suggests that higher annual rainfall in the Chaco than the Andean highland plains “may relieve concerns” about water usage seen in the Lithium Triangle.
According to one foreign mining director consulted by the Post, a recent plunge in global prices for the commodity due to oversupply — and topographical challenges in getting the mineral to the surface — means that many lithium concessions in the Chaco may take years to come to fruition, or never be exploited at all.
In 2022, lithium was trading at $81,360 per tonne. Right now, it barely fetches $10,000.
But the long-term prospects for the industry are brighter. As governments force their citizens to drop petrol cars in order to meet climate targets, demand for electric vehicles will only grow.
And it will be a tragedy if the lithium mining industry in Paraguay, under a discourse of sustainability, replicates the same concentration of wealth and power that brought us to the climate crisis in the first place.
There is a real risk of repeating the extractivist pattern that has marked Paraguayan history, from yerba mate and quebracho tannin to soybean and hydroelectricity: the looting of common goods to fill the pockets of the wealthy few.
Lithium mining might form part of the transition to a greener future, but only if that transition is based on social and climate justice. Otherwise, the only difference will be the resource being extracted.
Taguide Picanerai, a law student and activist from Chaidi — an Ayoreo village within the PNCAT reserve not far from the lithium claim granted to Valquiria — says the concession was granted in a hurry under the outgoing Abdo Benítez administration without any consultation of local Indigenous communities.
“We know perfectly well that electric vehicles form part of the agenda of governments around the world,” he tells the Post.
“But beyond whether it could bring positive or negative results, we should be consulted about these kinds of projects to see whether or not it affects us — and of course all others who live in the reserve.”
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