Debt Collection Services in Argentina and Uruguay

Latin America

Debts are part and parcel of company operations because there are always going to be some clients with unpaid invoices. At the same time, you might have given some of your employees loans that they might later find they are unable to return. Whatever the cause of your business debt may be, it could be seriously detrimental to the financial stability of your company. In addition, your debts can be a glimmer of hope in trying times since you might be able to recover your debts and improve your situation.

However, this is easier said than done because debtors will not be made to repay simply by requesting the money. Overdue payments and unpaid invoices can seriously hurt cash flow, obstruct business expansion, and deteriorate client relationships. This is where professional debt collection in Argentina can play a crucial role.

While you could attempt to handle it yourself, it would be wiser to work with a debt collection service that specializes in the task. They take all necessary steps to recover your company’s debts and charge a fee that is often a percentage of the total amount outstanding. Before hiring a debt collector, make sure to do some research and ensure you can trust them to put your recovery plan on track.

In this blog, we will look at some reasons you should hire a debt collection agency for your business.

What are debt collection services?

A debt collection service is a company that tries to recover money for you in exchange for a fee. Using a debt collection service in Uruguay for example, goes one step further than mailing a demand letter. It indicates to the hirer or buyer that you have decided to delegate the subject to professionals.

How Do Debt Collection Services Work?

If you have unpaid invoices and have tried to collect from your past-due accounts without success, it might be time to contact a collection agency. Collection agencies are experts at tracking down uncollected accounts receivable, typically in exchange for a share of any proceeds.

Once you hire a collection agency, they serve as a middleman. They will make an effort to get in touch with your creditors and try to get the money back for you. Working with a collection firm that adheres to all legal regulations is vital; otherwise, you risk being held responsible for any penalties or legal action that results from infractions. If the collection agency successfully collects the entire debt or a portion of it, their ratio will be deducted from the recovered sum, and the remaining sum will be given to you.

Debt Collection in Uruguay can be useful for maintaining your pursuit of past-due accounts while refocusing on your business’s activities. However, it is often used as a last resort by people who would make an effort to collect past-due bills by themselves initially.

Why Your Business Should Hire a Debt Collection Service Provider

Employing a debt collection agency is a financial investment in your company. As one of your most valuable assets i.e accounts receivable, it is crucial to ensure that you receive the money owed to you. Using a collection agency can help you do this. Below are some reasons you should hire a debt collection service in Argentina and Uruguay:

●      Successful debt recovery

Debt collection service providers have experience collecting outstanding bills, so hiring one boosts your chances of collecting delinquent debt. Your primary concentration is on running your business, whereas a collection agency’s primary focus is on collecting debts. A trained professional knows the best strategies for lawfully coercing debtors to pay, and collection firms pose a far larger threat to debtors than you do. A collection account can have a negative effect on a debtor’s credit score for up to seven years, hence, debtors frequently negotiate payment arrangements to avoid credit damage.

●      People pay faster

When you hire a debt collection service provider, customers pay you faster and more frequently. Some debt collection firms provide services that expedite the payment process, allowing you to receive your funds sooner. These services are compatible with your current billing system. You won’t have to spend time chasing down your customers if you utilize a debt collection firm. It saves you time, money, and energy, giving you more time to focus on what really matters: your business.

●      Detailed documentation

Debt collection in Argentina often keeps extensive records of all contact they make with debtors. These records will come in handy if you decide to take debtors to court. With such thorough documentation, you will be able to demonstrate to the court that you made significant efforts to contact your client and recover the debt.

This detailed documentation will also be useful if you wish to claim bad debts as tax deductions. You might use it to demonstrate that you have done your due diligence in attempting to recover the money owed to you.

●      Increased cash flow

Collections management can be time-consuming and irritating, particularly when dealing with difficult customers. This is where a collecting agency can be a helpful business partner.

By outsourcing your collections to a skilled collection agency, you can save time and money while enhancing your cash flow.

Collection agencies have the skills and tools necessary to recover debt swiftly and effectively, which means you get paid faster and with less inconvenience. Hiring a debt collection service may be exactly what you need if you want to increase your cash flow and keep your business running efficiently.

●      Legal compliance and risk mitigation

Today, debt collection in Argentina is governed by a plethora of rules, and knowledgeable customers will not hesitate to sue if their rights are disrupted. Debt collection agencies are aware of this, which is why they are well-versed in these regulations. Third-party collection agencies are well-versed in both federal collection regulations and the rules that govern the state in which the Agency is licensed. Allowing a debt collection firm to recover unpaid debts on your behalf reduces the legal dangers associated with attempting to collect debts on your own.

How to choose a debt collection provider

Below are some simple tips to help you hire an effective debt collection service in Argentina:

●      Do your research

Before working with a company to conduct debt collection on your behalf, do some extensive research and compile all the information you require. To start, be familiar with their past and present size. Look into their prior experience and discover the market segments they have served. A person with experience in your sector would be the best option because they are likely to be familiar with how things operate. Also, keep in mind the different business sizes and types they have served thus far.

●      Request reviews and referrals

Ask for reviews and recommendations from actual clients after you’ve narrowed your choices down to help you understand how they operate. After all, it will be these experts who will manage the public perception of your company. They ought to be able to recover your obligations, but how they go about it shouldn’t reflect poorly on you. Although you would want the debtors to pay their debts, you would also like to maintain your long-term relationships with them.

●      Verify the Agency’s credibility

The laws governing debt collection in Uruguay vary between states and municipalities. Verify that the candidate you wish to recruit is licensed and follows the Fair Debt Collection Practices Act’s guidelines.

●      Examine their procedure

The proper procedures must be followed because they are crucial to a business’s debt-collecting strategy. Make sure to inquire about the procedures they adhere to. They ought to begin calling, writing, and following up with letters to the debtors. They should proceed with legal action if there is no improvement. While they should be strong throughout the process, make sure they adopt a zero-harassment stance because a confrontational one could be detrimental to your reputation. Ask for details on the anticipated recuperation times as well.


Debt collection in Argentina and Uruguay is important for businesses looking to maintain financial health and stability. With the support of experienced debt collection agencies like Riskma Solutions, businesses can confidently navigate the challenges of debt collection.

Visit us today at Riskma Solutions. With its specialized experience and dedication to the No Win, No Fee debt recovery, Riskma Solutions stands out as a dependable partner for companies looking for efficient and legal debt recovery methods in these fast-paced sectors.

 Collection Agency



Argentine judge denies Maduro government’s request to be a party in the case of the seized plane

Latin America

The Argentine federal judge Federico Villena rejected the request of the firm of lawyers Gabriel Palmeiro and Maximiliano Rusconi to act as legal representative of the government of the questioned president of Venezuela Nicolás Maduro, as well as the company Emtrasur, in the case of the Venezuelan plane held at the Ezeiza airport, according to the decision to which CNN had access.

The brief states that “neither the Bolivarian Republic of Venezuela nor the Emtrasur company is a party to these actions.”

CNN contacted Palmeiro and Rusconi’s law firm to find out their reaction, but they assure that they will not comment on the case for the time being.

CNN also contacted the Maduro government and has not received a response so far.

The Government of Venezuela had appeared last week before the Argentine Justice to formally oppose the seizure of the Boeing 747 cargo, belonging to the state-owned Emtrasur, which Judge Villena ordered last week at the request of a United States court, according to the ruling obtained by CNN.

Palmeiro, a partner in Rusconi’s firm, acts by virtue of a power conferred on him by the president of Emtrasur in Venezuela and the attorney general of that country, Reinaldo Muñoz. According to the request signed by the lawyer, the retention of the aircraft “would represent an arbitrary interference in the public assets of the Bolivarian Republic of Venezuela and in the rights that concern its sovereignty.”

That was the first formal demonstration of the government of Nicolás Maduro before the Argentine Justice to try to reverse the judicial decision that provoked the anger of the Venezuelan ruling party.

Rusconi visited Venezuela this month, and held a meeting with Vice President Delcy Rodríguez and Foreign Minister Carlos Faría to advise the Maduro government on the cargo plane case, a source from the Argentine government and another close to Defense told CNN.

The Boeing, model B747-3B3, registration YV3531, has been held since June at the Ezeiza international airport, province of Buenos Aires, while it is being investigated whether the crew has links to possible Iranian terrorist activities in the country.

The aircraft was subject to a routine inspection by the FBI , under the supervision of the Argentine Federal Police.

Palmeiro had told the judge that he would state that “the Treaty of Mutual Legal Assistance in Criminal Matters with the government of the United States of America is not applicable.”

According to the lawyer’s argument, in reference to the legal argument cited by Judge Villena to authorize the seizure of the plane, the treaty “is exclusively applicable in procedures related to criminal matters. While the pretension that the government of the United States of America intends to channel in proceedings is of a different nature (commercial), an issue that, in addition, deprives it of active legitimacy in these actions.”

The request, now rejected, is added to that made by another Argentine lawyer, Daniel Ramón Trava, who represents Emtrasur in the file and who has already appealed the decision to seize the plane at the disposal of Washington. This under the argument that “an irreparable tax is taking place,” according to another document accessed by CNN.

Currently, the court case on the plane is divided into two files in charge of Judge Villena.

The original cause investigates the crew and the destination of the Emtrasur flight to Argentina.

In addition, there is another process in development due to the request of the United States Justice.

Peru to sue Repsol for $4.5bn over oil spill

Latin America

Peru’s consumer protection agency is suing Spanish oil firm Repsol over a huge oil spill which blackened beaches off the coast of Lima in January.

The spill, which Peru called the worst ecological disaster around Lima in recent memory, leaked more than 10,000 barrels into the Pacific Ocean.

The civil lawsuit seeks $3bn (£2.54bn) for environmental damage and $1.5bn (£1.27bn) for damages to locals.

Repsol has denied responsibility.

The company initially said the spill was caused by “sudden and extraordinary anomalous waves produced by the volcanic eruption in Tonga”. However, it later blamed the oil tanker.

On Tuesday, a Peruvian judge admitted the $4.5bn lawsuit by Indecopi against Repsol, meaning the case will go to court.

An underwater oil pipeline owned by the company caused a spill on 15 January. It happened when an Italian-flagged tanker, Mare Doricum, was unloading at Repsol’s La Pampilla refinery.

Repsol has denied responsibility for the spill and said that it sees the claim as “baseless, inadmissible, and inconsistent”.

“We have not yet been notified of the court’s acceptance of the complaint, and we do not know the details of the acceptance,” a spokesperson for the firm told the BBC.

“We reiterate that the causes are still under investigation, but that the preliminary findings indicate that it was caused by an uncontrolled movement by the Mare Doricum vessel while it was unloading crude at the terminal.”

“Even so, Repsol has used all means at its disposal to contain, clean, and remediate the coastline, assist the communities in the area, and rescue and attend to the fauna affected by the oil spill,” the spokesperson added.

Earlier this year, President Pedro Castillo described the spill as “one of the biggest ecocides ever on our coasts and seas”.

Hundreds of fishermen and hospitality workers also lost income due to the disaster, according to the Peruvian environment ministry.

Local fisherman staged protests because they were unable to go out to sea and work because of the spill.

Indecopi has alleged that the ecological damage is continuing to affect fishermen and the environment.

“We are looking to get compensation for the affected population… that lives within 150km of contaminated coast,” said Julian Palacin, the head of Indecopi, in a statement.

In January, prosecutors also opened a criminal investigation into Repsol’s role in the incident. Four executives from the firm were barred from leaving the country for 18 months amid the ongoing probe.

In May, Repsol said the clean-up would cost the firm $150m (£127m).

Repsol posted a net income of €2.499bn (£2.11bn) last year – sixteen times the clean-up cost.

Professor in geosciences at the University of Edinburgh, Stuart Haszeldine said that communities and countries “have a right to expect safe transport of oil and gas”.

“There is no established market to buy a clean beach or a seabird colony – inevitably large and financially well-resourced oil companies can deploy cash, lobbyists and legal teams to delay and defocus the blame game away from their responsibility,” he said.

“This will be a contest on the strength of Peru’s legal system to enforce environmental justice onto an unwilling and well-resourced multinational.”

“The final settlement may be influenced as much by Repsol’s valuation of its own reputation and future permissions to operate globally,” he added.

Melissa Moore, head of UK policy at Oceana, a charity campaigning for ocean protection, said she was pleased to hear the case would go to court.

“This damaging oil spill wreaked havoc on two protected biodiversity areas: the Ancón Reserved Zone and the Pescadores Islets – home to iconic and legally protected species such as the Humboldt penguin and sea otter,” she said.

“Countries globally such as Peru, as well as the UK, need to end our reliance on offshore oil drilling, which has destructive impacts on the ocean, including accelerating climate change.”

Cryptocurrencies stumble, but in Argentina they are still a safer bet

Latin America

Amid inflation and the collapse of the peso, many Argentines find cryptocurrencies a less risky option, even despite their recent difficulties.

BUENOS AIRES — Romina Sejas’ entry into the world of cryptocurrencies — in a country where the popularity of digital currencies has skyrocketed despite their volatility — began with a pizza.

A few years ago, I was helping to prepare pizza dough at a friend’s house on the outskirts of Mendoza, a medium-sized city in western Argentina. The friend suggested fermenting the dough in his mine. “He reconfused Me,” Sejas said. “I thought of mining and I imagined men with helmets and pickaxes.”

Instead, he opened a door that led into a room stacked with shelves of buzzing computers. Known as miners in tech parlance, computers work nonstop, verifying cryptocurrency transactions and rewarding their owners in digital currency. They consume so much energy that the room was a functional oven.

Sejas’ friend explained that entering the world of cryptocurrencies had increased his monthly salary by almost 40 percent, going from $800 doing odd jobs to $1,100.

Sejas soon became a believer in cryptocurrencies, joining a wave of Argentines turning to digital currencies as a way to earn more, increase their savings and even do business.

Although the cryptocurrency market has crumbled in recent months, many Argentines see it as a safe haven in a country where rising inflation and economic crisis have hit the national currency, the peso, and the bank accounts of the people.

“Money here is like ice cream,” said Marcos Buscaglia, an economist in Buenos Aires, the capital. “If you keep a peso for a long time, it melts away as far as what you can buy with it.”

Because so few Argentines trust the peso, they prefer to save in other currencies, including dollars.

About a third of Argentines believe savings kept in pesos at a local bank will hold their value for two years, the lowest percentage among respondents from 15 countries interviewed in June by Morning Consult, a Washington-based data firm. .

Almost 60 percent of Argentines believed that bitcoin, one of the most popular cryptocurrencies, would maintain the value of their savings during that same period, according to the survey.

With inflation expected to hit 90 percent in December, the value of the peso continues to fall, driving up the prices of everyday products, from toilet paper to tuna, making it virtually impossible to save.

Current global supply chain problems and the war in Ukraine have contributed to rising prices, but many economists blame Argentina’s woes on years of excessive government spending. Since the government does not collect enough to make up the deficit, the central bank prints pesos, causing inflation to rise even more.

Now, many Argentines are turning to cryptocurrencies as a way to escape the peso. About a third of Argentines said they bought or sold cryptocurrency at least once a month, twice as many as in the United States, according to an independent survey by Morning Consult.

But cryptocurrency, given its instability, also carries risks.

Vicente Cappelletti, 26, said he had lost about $1,000, about 10 percent of his savings, when TerraUSD, one of the so-called stablecoins — a type of cryptocurrency that can be pegged to government currencies such as the dollar — crashed in May.

Cappelletti, an industrial engineer, said it was easy to lose money “if you are not in this all the time and updated with information.” He sold all the savings he had in cryptocurrencies for pesos and put them in a traditional investment fund.

Pablo Sabatella, who runs an organization in Buenos Aires that offers cryptocurrency classes, said he had been contacted by hundreds of people in the days after Terra imploded, desperate to get their money back.

“Most don’t know what they’re doing,” he said.

Bitcoin’s value has fallen from $65,000 in November to around $24,000 today, almost double the drop in the value of the peso. But many Argentines believe that, unlike the peso, cryptocurrencies will recover.

For others, however, cryptocurrencies have brought financial benefits that come in handy.

Sejas, who has worked as a waitress and in telemarketing, makes a living as a cryptocurrency consultant and teaching workshops on digital currencies. She runs an online marketplace with 7,000 members who can use crypto to buy almost anything from hiking boots to a house.

Sejas grew up in a working-class family with no internet access. Her parents did not finish high school nor did they have bank accounts. “We measured even the toilet paper we had because we had very little back then,” she says.

The money he has earned from cryptocurrencies has transformed his life. “I am studying law at a private university,” she said. “I’ve done all the medical checkups I never did as a kid.”

Around the world, people in emerging and low-income countries have become the largest users of cryptocurrencies, according to various reports, surpassing the United States and Europe.

Digital currencies are appreciated in countries where local money is volatile and where governments have made it difficult for citizens to purchase foreign currency.

Two poor countries, El Salvador and the Central African Republic, have gone even further: they adopted Bitcoin as another official national currency, although the bet has not paid off in El Salvador, and it is too early to tell if it will in the Central African Republic. .

Argentina offers some clues about the appeal of cryptocurrencies.

Argentines have long turned to the dollar as a safe haven. Saving in dollars “is engraved in our DNA,” said Daniel Convertini, 34, who works in communications for a transportation company. “I learned it from my dad and my grandfather, not because I read it in a financial newspaper.”

Argentines are believed to have more dollars in cash or in foreign financial institutions than almost any other population apart from Americans, said Gian Maria Milesi-Ferretti, an economist at the Brookings Institution.

But three years ago, the Argentine government made it difficult to buy US currency. Argentines can only legally buy $200 a month and have to pay heavy taxes on each transaction.

Instead, many people have turned to the black market for dollars, and the streets of downtown Buenos Aires are full of moneychangers whispering their conversion rates to passersby.

But digital currencies offer the advantage of not having to lug around large banknote reserves.

“We offered a hack to the stocks by selling crypto dollars,” said Julián Fraiese, one of the founders of Buenbit, an Argentine cryptocurrency exchange that focuses on dollar -pegged stablecoins . The company said it had added 200,000 users in the seven months after government controls on dollars tightened in 2019.

Ismael Loyo, a 34-year-old taxi driver who moved from Venezuela to Argentina in 2018, turned to cryptocurrency after seeing the peso rapidly devalued, a repeat of what he had experienced back home. As soon as he gets paid, he connects to an online exchange and buys cryptocurrencies.

Aware of the ups and downs of the digital currency market, he explains that he is leaving a currency “that only devalues” and entering a currency that, although volatile, “allows the value to be maintained over time and increased.”

To people like Loyo, who has lived in two countries plagued by high inflation, bitcoin seems less like a speculative gamble than a necessity. “Maybe, being in another country, I wouldn’t have had the need to investigate why to do this,” he said.

Still, the decline in the value of cryptocurrencies has wreaked havoc, and concerns about its risks prompted increased regulatory scrutiny.

Buenbit recently laid off almost half of its employees, and days after two Argentine banks began giving their customers the option to buy and sell cryptocurrencies, the country’s Central Bank banned such services.

But since many Argentines have so little faith in their government’s management of the economy, cryptocurrencies, despite their turmoil, remain in high demand.

More workers in Argentina than in any other country, including many freelancers in jobs like software development and translation, choose to receive part of their pay in cryptocurrency, according to Deel, a payroll company employed by 100,000 freelancers in 150 nations.

“Technology is the language of the world to come,” said Fabián Báez, a priest who helps organize technology classes in a popular neighborhood in Buenos Aires, teaching, among other things, how to open a digital wallet. to start collecting cryptocurrencies.

In Buenos Aires, public bus billboards entice people with promises of high returns in stablecoins . Inside a busy subway station, an ad promotes: “Beat inflation. Buy bitcoin.”

“I prefer to take the risk of crypto,” said Convertini, an employee of the transportation company, “rather than the risk of the Argentine state.”

Mexico bets its energy future on oil, not on renewable energies

Latin America

President Andrés Manuel López Obrador’s effort to bring the energy sector under state control has put obstacles in the way of renewable energy and sidelined Mexico’s climate goals.

MEXICO CITY — On a sweltering afternoon in his home state of Tabasco recently, Mexico’s president celebrated his administration’s latest triumph: a new refinery .

Although not yet operational, President Andrés Manuel López Obrador hailed the project as the centerpiece of his grand campaign to ensure Mexico’s energy independence.

“We ignored the song of the sirens, the voices of those who predicted, in good faith, perhaps, the end of the oil era and the massive arrival of electric cars and renewable energies,” he told a enthusiastic crowd.

At a time when scientists are sounding the alarm about the need to move away from fossil fuels that contribute to catastrophic global warming, Russia’s invasion of Ukraine has ignited a global movement in the opposite direction: the United States and European countries are taking measures to increase oil and gas production to counter Russian energy bans.

But Mexico is going further.

Driven by López Obrador’s historic goal of withdrawing control of the energy sector from private companies so that state-owned companies dominate the market, the government is undermining efforts to expand renewable energy and betting the country’s future on fossil fuels. .

The policy is key to López Obrador’s ambition to reverse what he sees as a corrupt privatization of the industry, guarantee Mexico’s energy sovereignty and return the country to the glory days when oil created thousands of jobs and helped fuel the economy. economy.

To this end, Mexican authorities are using the might of their regulatory agencies to keep renewable companies out of the market, blocking the operation of their power plants and instead propping up hydrocarbon plants that the state owns or operates, according to interviews. with more than a dozen former government officials, analysts and executives from the energy sector.

As a result, analysts say, Mexico will almost certainly fail to deliver on its promise to the world to reduce its carbon output. The country may also have put billions of dollars of investments in renewables at risk and created another source of tension with the Joe Biden administration, which has made combating climate change a pillar of its foreign policy agenda.

“People say, ‘how are you going to meet your climate change commitments?’ And I always tell people, ‘well, he doesn’t care,’” said Tony Payan, a Mexico expert at the Baker Institute for Public Policy at Rice University, referring to López Obrador. “He is an oil man.”

The presidential press office, Mexico’s energy ministry and the state power company did not respond to requests for comment.

But López Obrador has argued that while the transition to renewable energy will happen at some point, Mexico is simply not ready.

“That technological advance will sooner rather than later become a reality,” he said at the refinery’s inauguration. “It is clear that, to get there, there is still time.”

The government has not completely abandoned renewable energy. He plans to spend some $1.6 billion to build a massive solar plant in northern Mexico, as well as retrofit more than a dozen state-owned hydroelectric plants.

Entrepreneurship in Peru and Ecuador: ecosystems that have yet to turn startups into unicorns

Latin America

Latin America has become the cradle of several startups that in the last year – many of them driven by the pandemic – have managed to take that long-awaited leap and become unicorns. This is the case of Ualá, Aleph, Mural or Tienda Nube, from Argentina; Kavak and Clip, from Mexico or Notco, from Chile, which reached a valuation of over US $ 1 billion. And the list of more startups that would be the next unicorns is long. This is demonstrated by an investigation by the venture capital firm ALLVP, which accounts for the club of soonicorn, or Latin American startups with the greatest potential to become unicorns. The report considers companies founded after 2012 with a valuation greater than US $ 100 million or that in their last round of investment have raised more than US $ 20 million of capital. Countries like Brazil, Mexico, Colombia or Chile stand out for having a list of several candidates. However, the story in Ecuador and Peru is different. In the first country they only have one startup aimed at the world of unicorns (the fintech Kushki), while Peru has two options: the edtech Crehana and the Favo food marketplace. And although Argentina follows these Andean countries with four startups, the land of tango is already home to several unicorns, such as the emblematic Mercado Libre and OLX. 

In the case of Ecuador and Peru, Both have ecosystems with similar characteristics that have delayed the generation of unicorn pasta startups. “Ecuador’s entrepreneurial ecosystem is in an initial stage and we are missing some factors to have unicorns or sonicorn companies, in this case. On the one hand, we don’t have as many entrepreneur support organizations such as incubators, climbers, mentoring programs and support programs for the development of knowledge and skills of entrepreneurs, which are so important for their startups to be successful ”, says Justin Schwartz, managing partner of the investment fund Impaqto Capital. On the other hand, the executive says that the venture capital industry is very small. “We only have five venture capital funds of different types, they are all small. Some invest in Ecuador and others in the region. There is definitely an access to capital gap for early-stage startups. Another point is that Ecuador is a small market, a startup cannot be successful or reach the level of a unicorn only with a focus on this country ”, he says. For Mauricio Andújar, CEO and co-founder of the digital transformation agency Liquid, the Peruvian entrepreneurship and innovation ecosystem is immature and still lacks time to reach the level of others, such as the Chilean or Colombian. “In the Chilean ecosystem, Startup Chile and the Production Development Corporation (Corfo) are two government vehicles that have made this dynamic. In Peru, in the last two years – with a pandemic and a political and economic crisis in between – government support has slowed. Programs like ProInnóvate have frozen aid and there are no new generations of nascent ventures and that is worrying. 

There are not so many new ventures coming out and my hypothesis is that it happens because there are not so many incentives for that to happen ”, he says. Additionally, Karen Montjoy, Entrepreneurship and Innovation coordinator of the Innova ESAN incubator, says that tax benefits are also necessary for more investors to invest in the ecosystem, make alliances with incubators and international events that promote entrepreneurship.


SOURCE: America Economy

The Air Freight Boom: Latin America’s Missed Opportunity?

Latin America

The solution is in the air. This thesis belongs to the shipping giant AP Moller-Maersk. Yes, the world’s largest cargo ship company is looking in the air for a way out of bottlenecks in the face of the container shortage that has kept seaports congested since the beginning of the year. The idea seems paradoxical, but it has worked. Between the months of April and May, when protests broke out in Colombia that caused blockades and the closure of ports such as Buenaventura, the distribution platform for youth lifestyle brands, Accur8 Distribution, was unable to move its cargo for the Vans brand from Asia, where it was dammed. 

Their inventories in the South American country began to run low and the time to fulfill their commitments was running out. Faced with this challenge, the shipping company responded by using an alternative mode of transport in which it combines maritime with air and Accur8 was able to deliver its merchandise on time. “What we are doing is providing a solution to customers,” explains Juan José Ballesteros, Maersk’s product management director for the West Coast of South America. Maersk’s case is not the only one. The high demand for consumer goods and manufacturers eager for parts has large markets such as North America, Asia and Europe taking over the cargo flights that come to the rescue –literally– of the merchandise that has been stagnant in ports due to the crisis of port logistics. So much so that according to the International Air Transport Association (IATA), cargo planes flew more crowded this summer than at any time since it began keeping records in 1990. But the overall scenario is more complex because not all cargo can be transported by plane and because there are cargo whose costs they are relatively low and do not support the high prices of air freight, which, like ocean freight, is through the roof due to high demand. Within this complicated scenario, Latin America has lagged behind, and not so much because its needs are different, but because its capabilities are limited and have not allowed it to respond to the feverish demand generated by the e-commerce boom and congestion in the port terminals, according to experts. 

“Latin America is not being able to capture all the capacity. It is not following the growth of demand as Europe and North America are doing, ”says Ballesteros. According to the IATA August report, air cargo transport (measured in ton-kilometers) continued to grow strongly globally with 7.7% in the eighth month of 2021, compared to the same period in 2019, while Latin America maintains this factor in the red with -13.2% (a decrease compared to the previous month in which the drop was 9.8% and an improvement compared to June, when it registered -19.9%), with a reduced capacity in -27.1%. “Today the freight industry is more or less double what it was in 2019, but the amount of tons transported has not increased significantly. That shows you that there is a very large imbalance between the demand that has grown a lot and the supply that has been blocked in its capacity ”, says Andrés Bianchi, CEO of LATAM Cargo. A turbulent outlook even for multinationals like DHL, the largest global parcel company. “Adapting to this new scenario has been a challenge that we continue to face,” acknowledges Alberto Oltra, CEO of DHL Global Forwarding in South America. According to the company executive, the fact that the supply of space is below the level of 2019 while global demand has already recovered and exceeded what was achieved in that same year, has changed the dynamics of the market. “The competition has been tough as spaces are very tight,” he says. In the region, This imbalance is mainly due to the fact that most air cargo is transported in double-aisle passenger planes, and when restrictions were imposed due to the pandemic, airlines left their planes on the ground, affecting the available space. “At first it was not felt so much because the big economies were stopped, but when consumption explodes at a global level and spaces are needed, the slow recovery of passenger flights generated a cut in capacity and therefore an increase in prices”, he explains Nicolás Portenza, CEO of Eternity Group México, a Chinese cargo transportation company. 

With the airline industry recovering very slowly and consumption accelerating due to e-commerce, the region has been overwhelmed. Electronic commerce “is being an important piece in the demand and in the lack of capacity,” says Portenza. And Carlos Ozores, vice president of the consulting firm ICF and director of Aviation for the Americas, endorses it. “The growth of e-commerce is tending to be much more dependent on air due to the promise that the seller has to deliver you in a short time,” he says. So much so, that during the pandemic e-commerce has reflected for the Colombian airline Avianca a growth of 12 times that transported in 2019. “It has been for us one of the products with the greatest increase in exports to Latin America and intra-Latin America” , acknowledges Gabriel Oliva, CEO of Avianca Cargo. A factor that can make the difficult Latin American scenario even more complex considering that the World Trade Organization (WTO) foresees that consumption will accelerate towards the end of the year and world trade will grow 9.5% in 2021. Given this, Alejandro Méndez, Vice President of Aeroméxico Cargo, issues a warning: “The capacity that we as airlines can provide to the monsters of e-commerce is very limited on some routes.” The lag of Latin America vs. the world These are challenging times for international logistics due to soaring costs and slowing down operations. Maersk’s product management director explains that the problem itself encompasses all actors in the chain. “There are fewer airline options, there are congestion in the hubs because the airports are operating with fewer personnel and, therefore, there are fewer flights and the cargo does not connect on time. There is a shortage of personnel, there is a shortage of carriers and that requires planning to be even more critical ”, describes Portenza. And in Latin America, where the restrictions to contain the COVID-19 pandemic have been more durable than in other regions, this reality has had a greater impact. “There has been a reduction in the number of people available for transport and warehouse logistics work and that is why capacity has been lost. The cargo cannot be prepared on time ”, acknowledges the head of LATAM Cargo.

For Eliseo Llamazares, leading partner in Aviation and Tourism for KPMG in Latin America, the equation that explains why Latin America has not grown so much in demand is simple: The restrictive measures have slowed down the recovery of the economy and the cargo business is fueled by economic growth. Furthermore, the fact that the restrictions have been so different within the countries of the region produced an imbalance between supply and demand. But it’s not the only thing that makes the stage difficult. According to Llamazares, the performance of air freight in Latin America has always been worse than in the rest of the world because for years airlines greatly reduced the volume of cargo planes. “Many of the big companies that had pure freighters, they switched to the transport of merchandise in the warehouse of commercial aircraft, which is much more efficient since the cost can be shared between passengers and cargo,” he says. Consequently, In Latin America, this capacity was substantially reduced, so much so that when demand skyrocketed in the midst of the pandemic, airlines had no choice but to convert some of their aircraft. With limited capacity, the logistical challenge for Latin America seemed large, if it were not for the fact that it is a region with a small air import, which moves mainly perishable products. 

“The cargo dynamics in South America is different from other regions due to the mix of commodities that move. Furthermore, while regions such as Asia and the United States transport finished products by air, what we export the most (by air freight) are perishable products, ”says Bianchi. Only Brazil and Mexico move large volumes by air, and neither country completely stopped its air operations during the pandemic. In fact, the performance of Mexico stands out as the only one with a performance similar to that of the large markets. According to the IATA report, the country experiences the same growth trend in cargo transport as other regions, with a 12% increase in the first half of this year. The association, in fact, estimates that at least 30% of the total income of Mexican airlines will come from freight transport, something that has not been seen for a decade. Nicolás Portenza, who directs the Mexico – Asia logistics corridor for Eternity Group, reports on this growth and how airplanes are transporting merchandise that would normally go by sea. “We have seen very high demand for a product from our importers in Mexico to meet the market, and despite the high cost of the air, it was decided to fly,” he says. Although, due to confidentiality, he did not reveal details of the clients who have chosen this route, he did comment that many industries are having record sales of household appliances, white goods, and that retail has had a significant consumer boom. “When companies need some components to manufacture, meet quotas, they have changed their operations to air,” he reiterates. In the case of Aeroméxico, the increase has been very marked by the transfer of auto parts. In fact, Méndez affirms that many of the “express requirements” that they have had to attend to in recent months correspond to this sector and with greater dynamics on routes that cover the Asian continent. “We are reaching destinations that we never thought we were touching,” acknowledges the VP of Aeroméxico Cargo. Some of the routes that they cover and that are not part of their passenger offer are the Chinese cities Shenzhen, Hong Kong and Wuhan, as well as the Russian capital, Moscow. This transfer of cargo from one modality to another has also been seen in DHL and, according to Oltra, it is a phenomenon that clearly responds to an urgency to replenish stock. “This represents a break for the sector since in 98% of the cases the companies try to minimize the logistical cost giving priority to the maritime transport”, says the CEO for South America of the German company. A sample of how the dynamics in general have changed. “Today the market is more spot and shipment by shipment […] and the possibility of hiring charters for its own operation has become a solution,” he adds. The Maesrk experience is no different. “We are ensuring air capacity with charter flights for flows from Asia to Central and South America,” says Juan José Ballesteros. According to the executive of the shipping giant, in his case it is a proactive rather than reactive strategy. 

“We do this transfer in a coordinated way with the client and for that we ask for great planning,” he assures. The “mutation” of airlines to respond to demand Airlines in Latin America have done their best to adapt and respond to high demand. Many of them responded by transforming some of their passenger planes into cargo planes. Even so, capacity remained limited because, first, that adaptation cannot be done with all models, and second, the modifications fail to decompress much of the load. “If a commercial airline takes a Boeing 787 airplane and makes modifications to it to turn it into a cargo plane, it would be able to fly between 30 and 40 tons. That is half of what a Jumbo 747 can carry ”, says the CEO of Eternity México. Now, from a business point of view, it has been a great opportunity for airlines because it has allowed them to alleviate the impact that the pandemic had on the airline industry. And the ones that have known how to take advantage of it best –according to the consultant Carlos Ozores– are those that carry the cargo business in their DNA, such as LATAM and Avianca. The numbers of the Colombian holding show the good results. During the pandemic period, Avianca Cargo increased the use of freighters by 19% and cargo flights by 13%, compared to 2019, with an increase in frequencies in the markets of the Southern Cone. These are the highest levels of cargo fleet utilization for the airline, according to the company’s chief. “We quickly adapt to new market conditions, modifying our network according to demand, increasing frequencies to Europe up to seven flights per week and launching a new multimodal maritime and air service to improve our connectivity”, explains Oliva. Between January and August of this year, Avianca saw its capacity decrease by 30% compared to 2019, mainly due to the reduction in passenger flights, but the load factor increased 8 points to 68.4% and revenue per ton-kilometers available (ATK) increased 70%. “The high demand has been constant in all markets, however, the most representative have been concentrated in flower routes, specifically from Colombia and Ecuador to the United States, with a growth of 21%”, adds the head of the cargo unit of Avianca. In the case of LATAM Cargo, at least half of its cargo capacity came from passenger planes, so the restrictions caused it to lose a good part of it. Given this scenario, Andrés Bianchi details, they focused on three points in order to meet the demand: increase the utilization of the cargo fleet, maintain as many passenger flights as possible, and fly cargo-only passenger aircraft. These measures have allowed it to keep the business afloat, which in August of this year registered an occupancy of 61.9%, which represents an increase of 7.4 percentage points in relation to 2019.

“We have seen in our cargo planes that It is typical of the maritime sector and that it moves by air only in urgency, such as certain parts of cars, tires… we have even carried a brick charter ”, says Bianchi to exemplify how the business is moving. Amid this boom, LATAM Group announced a plan under which it expects to gradually add 10 Boeing 767-300s over the next three years, to total a fleet of 21 cargo aircraft by the end of 2023. “The cargo business has weathered the crisis very well, so much so that LATAM will double its fleet within two years. This is because they recognize the opportunity that exists in this business and that a slower recovery of long-range international flights is coming ”, comments the ICF vice president. Although Bianchi affirms that the plan was devised before the pandemic, he acknowledges that the fact that the business is going through a very auspicious moment, “makes it important to execute it well and quickly.” Unlike Avianca and LATAM, Aeroméxico does not have the cargo business in its DNA, so its effort was focused more on adapting this model. “We are a cargo division of a passenger airline, therefore our planes fly depending on the demand for passengers. But at the beginning of the pandemic, it was not flying and there was a need to transport cargo. That led us to start with a model that previously did not exist in the [Aeroméxico] group, ”highlights Alejandro Méndez. Thus, in March 2020 Aeroméxico carried out the first cargo charter flight in its history. At the time of the interview for this report, Méndez reported flight number 398 and assured that it would reach 400 charters before the end of the week. “We do not adapt airplanes, what we did was load the cargo in the passenger cabin and fly,” says the executive. The historical gap in maritime and air prices is reduced Historically, maritime transport has been more competitive than air. And it continues to be the case, the gap between the two modes has not been reversed, but it has narrowed. The increase in maritime freight prices has been so exponential since the beginning of the pandemic – in the order of 800%, according to Portenza of the Eternity Group – that it has cut the difference with air, which has seen its prices increase between 100% and 120% depending on the route. “Now the difference, which was 12: 1, has gone to 6: 1,” says Gabriel Oliva. 

Hence, IATA claims that air freight is becoming more competitive. The increase in rates is a simple effect of the law of supply and demand. But more is also being paid to move planes with just half their capacity, explains the CEO of LATAM Cargo. “As a result of the pandemic, commercial flights are canceled and there is not enough cargo fleet to respond, therefore, the only option has been to fly passenger planes without passengers… but since I can’t carry cargo on the seats, you end up flying only with the hold. So you are paying the cost of moving the entire plane, using only half the capacity ”. In the case of LATAM, until August 2021 the cargo rate had risen almost 60% compared to 2019. Very similar to the 50% on average that they have seen reflected in Aeromexico. According to Juan José Ballesteros, at the peak of the pandemic the air freight rate went from US $ 4 to US $ 20 per kilo, and is currently between US $ 7 and US $ 12. It is not very different from what it reports. Nicolás Portenza, from Eternity. “At the air level, the rates for the Asia-Mexico route in the pre-Covid season ranged from US $ 4 in low season and from US $ 6 to US $ 7.5 per kilo in high season. Right now we are flying cargo with rates between US $ 12 and US $ 14 per kilo, ”he says. And can the market pay the high costs? Yes, because the operation covers it. “It is still a business for importers to fly and comply, because eventually the final consumer pays for it. There is an inflationary impact on the destination markets because they are costs with a significant increase compared to what happened years ago ”, explains Portenza. Alberto Oltra, from DHL, acknowledges that this impact on the final cost of the product is inevitable when prices have doubled, but also warns that if rates continue so high, nearshoring may occur (that a company decides to transfer its business processes to a geographically close foreign country). “This situation would have an effect on local economies, where the production of goods intensifies, as is already happening with some auto assembly plants in Mexico, which have returned to produce there, ”he highlights. For better or for worse this condition will not clear up anytime soon. Analyst Carlos Ozores indicates that airlines in the region will place emphasis during their recovery on single-aisle aircraft, which are smaller and have less cargo capacity. “(Therefore) there will continue to be a gap in space available for cargo planes,” he says. The truth is that this rise in airfares has represented a great relief for airlines. In the last year and a half, the cargo business went from being between 5% and 10% of total revenue to a much more relevant part (between 30% and 40%), making it a valuable source of cash and a way to offset part of the losses in the airline industry, which IATA estimates will exceed US $ 48 billion this year. “The cargo business has worked as a countercyclical compensation for what has happened with passenger flights,” acknowledges Bianchi. Before the pandemic, cargo represented approximately 10% of LATAM Group’s revenues, and in the last semester they accounted for 40%. 

In the case of Avianca Cargo, so far in 2021 it has had an increase in its freight income of 19%, and these represent 32% of the total income of the holding company. For Aeroméxico, the reality is not very different, although its levels are below those of LATAM and Avianca. “In 2019, cargo represented 6% of the Group’s total income. In 2020 it was 16% and today it is in the order of 13% ”, explains Méndez. That is why the IATA forecasts on this factor are quite optimistic. According to the agency, revenues from the global aviation sector from the transport of goods have doubled to 30% of pre-pandemic levels and are estimated to rise to a record $ 175 billion in 2021. A resilient and necessary business for the region One of the realities that have emerged in the midst of the crisis in the airline industry and the boom in demand for cargo flights, is that Latin America is in debt in this business, so it is imperative to increase its limited capacity in these times of high consumption driven by e-commerce, a phenomenon that will not stop until at least 2024, according to data from the Statista Digital Market Outlook. In fact, for Eliseo Llamazares the great hopes for the region are precisely in e-commerce and he hopes that it will become a significant source of freight transport. “Just as Amazon is an important player in the United States, in Latin America we have Mercado Libre taking its first steps in the air cargo market and it can become a significant player,” says the KPMG analyst. In any case, the important thing now is that the industry not only begins to create strategies to sustain itself in this situation, but also projects how to benefit its distribution chain in an increasingly demanding world, considers Oltra. DHL’s leader for South America believes that the implementation of technology and continuous improvements such as those they have been implementing to track shipments at each stage and online quotes is essential for this. In other words, companies must adapt and prepare for the times to come. Above all, considering that it is a business “resistant to shock like that of the pandemic”, assesses the ICF consultant. For this reason, in recent months the demand for aircraft conversion has increased, which shows the interest of airlines in this market. “What LATAM is doing only indicates that it is preparing for a ‘V’ growth of the economy,” says Llamazares, who insists that airlines should take advantage of economic growth and develop the cargo business. And in Aeroméxico they are considering it. Although Alejandro Méndez could not reveal details of what they plan to do as an airline group, he acknowledges that the new scenario has led them to rethink the need to maintain this model. “We are evaluating it very seriously. The niche is there, it is not an occasional demand, it will continue there. 

This is a requirement that has to be met and we have to be there ”, says the vice president of Aeroméxico Cargo. What he did advance was that they are betting heavily on the transport of pharmaceutical products, a niche in which they want to be leaders; and for this they are making the necessary operational and infrastructure adjustments. But it is not a job only for the airlines. The other reality is that the region lacks an adequate airport and logistics infrastructure that allows it to generate greater cargo capacity. In this regard, Méndez states that the Mexico City International Airport -the main one in the country- is a clear example of these challenges. “The space issue is a serious matter, we have structural limitations that become bottlenecks and prevent us from taking advantage of opportunities,” he says. And he is not the only one with this critical view. For Andrés Bianchi, it is necessary “to have better airports, greater warehouse capacity and authorities more open to listening to proposals for improving productivity that would make the business work better.” For now, this dynamic of high demand will continue for at least one more year, according to experts’ estimates, but the region will remain limited with a slow growth rate. “In Latin America we will continue to see a lower expansion than other markets,” says Llamazares. The cargo business in Latin America will grow, but still not enough to close the gap with other regions. Globally, IATA estimates that air cargo demand will close this year at 7.9% above 2019 levels and that in 2022 it will grow by 13.2%. And if last summer was a record period for the transport of air cargo, the Christmas season is coming as the biggest challenge. The International Air Cargo Association (TIACA) has warned: “We face unprecedented challenges in meeting the demand for air cargo services forecast for the fourth quarter of the year.” Given this, urged governments to streamline ad hoc freight permits and initiate planning. “Resources and capacity will be a problem, also handling, the space of the facilities, delivery and drivers,” warns Steven Polmans, president of the organization, through a statement released last September. At Maersk they are aware of this challenge and have been preparing for it. “We believe that this campaign (the last quarter) may come 30% stronger than last year,” says Ballesteros. In general, he adds, it is a very demanding period on the west coast of South America because fruit shipments coincide with the Christmas season. “In Chile, the cherries campaign is going to be critical towards the end of the year. This is demanding not only maritime capacity, but also air capacity ”, he comments. To face this challenge, the airlines will not be able to count on the recovery of air traffic that will allow them to absorb this peak in demand, so we are on the verge of a strong rise in demand on a capacity that is already quite overextended. 

SOURCE: America Economy

The outpost of the lithium Triangle: Argentina, Bolivia and Chile monopolize global investments

Latin America

Jujuy, Salta and Catamarca. Three provinces located in the northwest of Argentina that have become an important enclave for the extraction and production of lithium. Such is the wealth of this metal in this area, that at the beginning of October the governors of these provinces signed an interprovincial treaty for the creation of the Lithium Mining Region. “In this way we advance so that the three provinces offer the same opportunities for those who want to invest, with clear rules, legal certainty and predictability,” said the governor of Salta, Gustavo Sáenz, after announcing the creation of this region. The Salta authority knows that with electromobility stepping on the accelerator in the world, time is money (in this case white). Thus, in recent months this province has managed to attract large investments, as is the case of the world’s most important lithium company, the Chinese Ganfeng Lithium, which announced an investment of US $ 580 million to carry out the Mariana project in the Salar del Llullaillaco, southwest of the Los Andes department, in Salta. In the neighboring province of Catamarca, another Chinese giant, this time Zijin Mining, one of the largest gold and copper producers in the Asian country, recently announced an agreement to acquire all of Canada’s Neo Lithium, focused on the exploitation of its mine. of lithium from Tres Quebradas. The amount of the transaction: US $ 740 million To date, Argentina has a portfolio of 20 lithium projects and their progress is diverse. In addition, Investors come not only from the mining sector, but also from the automotive and technology industries. This is the case of Toyota, which confirmed an investment of US $ 400 million to increase the production of lithium carbonate for the manufacture of batteries through the company Sales de Jujuy – where Toyota Tsusho owns 25% in association with the mining company Orocobre ( 66.5%) and the Jujuy state company Jemse (8.5%) -. BMW, for its part, signed a contract in March 2021 with the US mining company Livent for US $ 334 million for the purchase of lithium from the project that the company has in the Salar del Hombre Muerto located in Catamarca. With this agreement, Argentina would become the German automaker’s second lithium supplier from 2022, behind Australia. Thus, Argentina, which is part of the famous Lithium Triangle, A region that concentrates more than 50% of this resource in the world, also made up of Chile and Bolivia, is emerging as one of the few countries that is able to respond to the growing demand for this input for the production of ion batteries. Rechargeable lithium, a key part for the operation of electric vehicles. Chile and Bolivia also meet this profile, although in the Altiplano country, despite having the largest amount of reserves in the world (21 million tons), it still cannot extract it. 

THE DREAM OF ELECTROMOBILITY COME TRUE Before the pandemic, electromobility sounded like a dream far from being realized. Changing a gasoline car for one that needs electricity to function in a world that still does not have the recharging infrastructure to guarantee its operation and when its price that can be up to 100% more expensive than a conventional car, were not the best incentives to opt for an electric car. Today the panorama is different. The pandemic quarantine gave a break to the world automobile fleet and the reduction in the use of fossil fuels brought a considerable improvement in air quality, causing many countries to take seriously their electromobility plans that would be reflected in a greater demand for electric cars together with other efforts to slow the advance of climate change. According to a report prepared by the Ultima Media consultancy for the Swiss group ABB, the global battery manufacturing capacity expected by 2030 will not be sufficient to meet the demand from the automotive industry. This is due to the fact that electric cars will exceed those of combustion in sales in 2036, the year in which 80 battery factories will be in operation around the world. “There is concrete data and evidence that allows us to visualize that there is a strong accelerated trend of electromobility cannibalism on internal combustion in the transportation industry. Therefore, being this one of the largest industries in the world, this technological mutation will imply unthinkable changes in our lives and civilization. For all this, I consider the enthusiasm on the subject justified and even timid, ”says Jaime Alée, president of ESK Consulting. For Chris Berry, founder and president of the consultancy House Mountain Partners, although interest in electric mobility is at an all-time high and sales of electric vehicles continue to increase, this high demand for this type of car has had an effect on production systems of the automotive industry. “Recent data with clogged supply chains and a lack of semiconductor chips for all cars shows that this is starting to affect automotive sales in general and may also affect EV sales in the future until supply chains can begin to operate efficiently again. This could take more than a year to resolve, ”he says. And although in Latin America the lithium supply chain has not yet reached the stage of production of batteries and much less of vehicles, all the experts consulted for this report agree that this great optimism about the high demand for electric vehicles has good fundamentals and now is the time for the countries of the Lithium Triangle to take advantage of this boom and become strategic suppliers especially for the future automotive industry. Thus, the security of lithium supply has become a priority for technology companies in the United States and Asia. Thus, In recent months, strategic alliances and joint ventures have been established between technology companies and exploration companies (such as those mentioned above in Argentina) to guarantee a reliable and diversified supply of lithium for battery suppliers and vehicle manufacturers. For Patricia Vásquez, Global Fellow at The Wilson Center, at this juncture there is no time to lose. 

“The optimism for the Lithium Triangle and other countries like Peru, Mexico and Brazil is well founded, especially for countries like Argentina and Chile that are very advanced. Countries like the United States and Europe have made important commitments to electromobility and in the next 10 or 15 years Latin America is very well positioned to respond to part of that demand. Although it is true that lithium is abundant and many countries are looking for it even at the bottom of the sea, the technology must be developed to extract it, make the investments and that takes a long time. That’s why the opportunity for the Lithium Triangle is now, before the competition starts, ”he says. For now, according to data from the United States Geological Survey (USGS, its acronym in English), identified lithium resources have increased substantially worldwide and total around 86 million tons. Only the Lithium Triangle concentrates 47 million tons, with Bolivia being the country with the largest quantity: 21 million tons. “The Lithium Triangle will always be attractive from a cost perspective with some of the largest and lowest cost lithium resources on the planet. The recent lithium deals in Argentina with the Chinese company CATL buying Millennial Lithium and Zijin Mining buying NeoLithium are two examples of the attractiveness of Argentine lithium assets. In addition, Sigma Lithium is building the first phase of its hard rock lithium mine in Brazil with first production planned for the end of 2022. They have current purchase agreements with Mitsui and LG Energy Solution, which are world-class partners. South America will remain an important part of the lithium supply chain for many years to come, ”says Chris Berry. In addition, countries should take advantage of good lithium prices to attract more investment. Especially when the price of lithium carbonate is at its best. Benchmark Mineral Intelligence, The global battery supply chain investigation and price information agency reported that last September lithium carbonate increased in China (the main consumer of lithium) 170% so far this year, to 142,000 yuan a ton (US $ 22,000), its highest level since April 2018. Meanwhile, in other markets, the price of lithium rose from US $ 17,500 per ton at the beginning of September and reached US $ 19,000 in the first half of that month.

A year ago, when the COVID-19 pandemic halted lithium extraction and crippled mining activity in general, the metal’s value fell below $ 7,600 per tonne. “Lithium will stay at that value in the long term or it will go down. Possibly there is some adjustment volatility between supply and demand, but the trend is that there will be no shortage of supply and prices will adjust ”, says Jaime Alée. FROM THE TRIANGLE TO THE SQUARE Although many countries around the world have launched into the search for lithium, some Latin American nations have already made some progress, although still far behind the Lithium Triangle. This is the case of Peru, where the Canadian junior Plateau Energy found in 2017 a lithium deposit in the Andean region of Puno called the Falchani lithium project. This year, another Canadian, American Lithium, completed the acquisition of its compatriot, the parent company of Macusani Yellowcake, a mining company that operates and manages Falchani. “The new owner, American Lithium, is giving a lot of movement to the project. You are going to resume exploration so that once the resources are defined, that is good news. With this, the quality of proven reserves will be verified and quantified. The company also operates in Nevada, United States, whereas the previous owner was a junior mining company ”, says Rómulo Mucho, former president of the Peruvian Institute of Mining Engineers (IIMP). Regarding the amount of resources in Falchani, the Ministry of Energy and Mines (Minem) of Peru estimates that 23,000 metric tons of lithium carbonate can be extracted per year. In addition, the Minem projects Falchani a useful life of 26 years. “There is lithium all over the world, but not from Peru’s concentration of more than 3,000 parts per million. That is a fabulous law and much more than the 500 parts per million that the Bolivian salt flats have. 

In the case of Peruvian lithium, which is in rock and requires another process to extract it, the concentration is up to six times higher. Thus, to the Lithium Triangle, which has considerable reserves, Peru could be added. I see a great future for the project, taking into account that it is an obligation to go towards renewable energies ”, says Rómulo Mucho. Mexico is another country that has been causing people to talk, not only because of its clay-based lithium project located in the state of Sonora and in the hands of the British Bacanora Lithium, but also because of the way in which the government of Andrés Manuel López Obrador wants to manage it. From copying the Bolivian model and taking charge of the entire lithium production chain to the controversial proposal for constitutional reform with which the Mexican president intends to put total control of the electricity sector in the hands of the state Federal Electricity Commission (CFE), disappear regulatory bodies, eliminate permits and guarantee the control of the State over the precious reserves of lithium. This has set off all the alarms of potential investors and even the Mexican Mining Chamber (Camimex) has already warned that this rule would make several projects unviable. The truth is that the lithium project arouses a lot of interest. And it is that Bacanora Lithium has as a joint venture partner Gangfeng Lithium, which owns half of the project and is struggling to get 100%. For now, the Chinese company, which is a Tesla supplier, has already announced that it will build a plant in Sonora to recycle electric car batteries, an important process in the production and adoption of these vehicles in America. And the scenario could not be better for the Sonora lithium project, taking into account the large automotive industry of the North American country and its proximity to the United States, an economy that has been driving the demand for electric cars and that together with Canada have the T-Mec, a commercial agreement that stipulates that 75% of the content used in the The automotive industry must be regional, which encourages investment in this field. “Imitating the Bolivian model or nationalizing lithium is absolutely a political discourse, which has no practical or economic sense. In Bolivia, Evo Morales invested about US $ 500 million to develop lithium batteries. The result is that he created a company that has not sold a single gram of lithium, even though it has one of the largest reserves. This shows that there is a great distance between having reserves and producing them. The national lithium industry has only consumed money. Mexico is probably going to manufacture batteries and electric cars for its main industry, which is led by American companies that have their factories there, ”says Jaime Alée. The political plane could also play against Chile, the second largest lithium producer in the world. 

“In this country we do not know what will happen with the change of the Constitution. Although Chilean production is higher than in Argentina, this country has a larger project portfolio despite its economic and political ups and downs that characterize it. Currently in Argentina there are fewer barriers to investment while Chile demands that companies have to form a joint venture with the national company and give 25% of production, because in this country lithium is considered strategic ”, says Patricia Vásquez. The southern country, whose lithium industry is dominated by companies SQM and Albemarle, knows that it has lost competitiveness in recent years, giving its rivals a certain advantage. In this regard, last week Chile announced an auction process to award operating contracts to explore and produce 400,000 tons of lithium metal for batteries, in an attempt to boost production and meet global demand. “Our country, which until 2012 was the world’s leading lithium producer, was surpassed by Australia and it is expected that by the end of this decade China will displace us to third place,” the Chilean Ministry of Mining and Energy acknowledged in its statement. For Chris Berry, Latin American governments must ensure that they do not “kill the goose that lays the golden eggs” by increasing royalties, taxes or regulations. “They have to strike a balance between allowing companies to operate in the country and doing it in a responsible manner so that all stakeholders can benefit. Chile is rewriting its constitution and the next presidential elections in Brazil are two events to take into account in South America, ”he says.


Source: America Economy

Blinken vows to ‘correct imbalance’ in Washington’s approach to Latin America

Latin America

US secretary of state discusses Washington’s new approach to the region during a short trip to Quito and Bogotá.

US Secretary of State Antony Blinken promised this week to broaden Washington’s relationships beyond security funding in the struggle to promote democracy in Latin America.

Blinken made a three-day visit to the region, meeting a host of conservative leaders.

Colombian President Iván Duque, who has come under fire over a deadly police crackdown on protests, welcomed the top US diplomat at the Casa de Narino palace in Bogotá for two days of talks that will focus on key priorities of US President Joe Biden – climate change and migration.

Blinken will meet ministers from around the region amid a sharp rise in the number of desperate Haitians who are making a long trek from South America to the United States.

Duque was a close ally of former US president Donald Trump and has so far not been able to meet Biden, who faces pressure from left-leaning lawmakers in his Democratic Party to suspend assistance to Colombia on rights grounds.

Colombia for decades has been a top recipient of US military assistance, including in its decade-long campaign against FARC rebels.

In a speech in Ecuador prior to his visit to Colombia, Blinken said that the US record on security assistance in Latin America has been “mixed.”

“That’s because often we tried to fix the problem by relying too much on training and equipping security forces, and too little on the other tools in our kit,” he said at the Universidad San Francisco de Quito, with the green Andean foothills behind him.

“We focused too much on addressing the symptoms of organised crime, like homicides and drug-trafficking, and too little on the root causes. We’re working to correct that imbalance.”

He acknowledged the long shadow of US support for dictators, saying, “There were times when we supported governments in the Americas that did not reflect the choice or the will of their people and did not respect their human rights.”

In a letter to Blinken ahead of his visit to Bogota, Human Rights Watch said that Duque has presided over police brutality “unprecedented in recent Colombian history” with dozens killed this year in a crackdown on major demonstrations over proposed tax reforms.

“A strong public and private response by the Biden administration could help prevent further human rights violations,” wrote the group’s Americas chief, José Miguel Vicanco.

Blinken in his speech said that the United States had tools in addition to security funding. He pointed to the Biden administration’s greater push on fighting corruption, including denying visas to officials involved in graft.

Amazon deforestation pact

Speaking Thursday, Blinken said that the United States will also launch an Amazon-wide regional pact to reduce deforestation, a bid to fight a key factor in climate change.

Washington’s top diplomat said the a “new regional partnership specifically focused on addressing commodity-driven deforestation” would be set up “in the coming days.”

The initiative will “provide actionable information to companies so that they can really reduce their reliance on deforestation,” Blinken said.

He said the pact would also include financial assistance to help manage protected indigenous areas and support the livelihoods of farmers.

Without giving further details, Blinken said he expected the partnership would help preserve 4,500 hectares (11,000 acres) of forest and prevent the emissions of 19 million metric tons of carbon dioxide.

Rainforests are crucial for the environment because they serve as huge carbon sinks, but greenhouse gas emissions from burning and industrial-scale agriculture in the Amazon account for higher total annual emissions than those of Italy or Spain.

By far the largest Amazon nation is Brazil, where President Jair Bolsonaro has championed big agriculture in the forest and has been accused of abetting the killings of environmental defenders.


The expert who proposes including part of Latin America in the US economic growth plans.

Latin America

Among so many differences that the policy towards Latin America of the president of the United States, Joe Biden, has with that of his predecessor Donald Trump, there is a similarity: migration is a priority.

The US goal remains to reduce the irregular flow of people entering the country; Trump tried with threats and severe measures, Biden promises to address the causes of emigration in Central America, such as poverty, violence or corruption.

But some analysts note that Washington still lacks a broader strategy toward its southern neighborhood, including economic, commercial or even health initiatives in the face of the covid-19 pandemic.

In this context, Richard Feinberg, a professor of international economic policy at the University of California San Diego, launches a bold idea: that the US include the countries of the Caribbean basin in its domestic economic plan.

This would mean adding from Mexico to Central America and Colombia to Biden’s initiatives to improve infrastructure, digitization, education and job training in the United States, explains in an interview Feinberg, who directed inter-American affairs at the National Security Council of the White House during the government of Bill Clinton (1993-1996).

What follows is a synthesis of the talk, translated and edited for clarity, with this expert who also worked in the US departments of State and Treasury and recently published his proposal at the Wilson Center in Washington:

Your proposal probably reflects the idea that something must change in the way the US views Latin America …

The Biden administration is just beginning. The problem is that the region is not doing well enough.

I am not one of those who say that all of Latin America’s problems are due to the failure of US foreign policy. Countries must take responsibility for their own stories.

Now, the United States has an interest, like any great power, in countries of its near exterior.

Western Europe deals with Eastern Europe, Southeast Asian China, in the sense that they see their destinies as inevitably intertwined by geopolitics. This is in the interest of the great powers to promote economic prosperity and political stability.

What I recommend is a series of policies that encourage work with Central American and Caribbean countries, both of interest to the US and the region: more economic growth distributed more equitably and stronger, more vibrant and democratic institutions.

Isn’t the US doing that?

The Biden government has only been in place for 100 days, it is very early.

What he has suggested is a more or less traditional foreign assistance program to the Northern Triangle countries (Guatemala, Honduras and El Salvador) of some US $ 4 billion over four years. Of course, they have to define what they are going to ask for and go through Congress.

The Biden government agrees with many academic analyzes that say that the main problem in the Northern Triangle and in other developing countries has to do with the quality of government: it does not represent the population well, the institutions are weak, they cannot implement policies and a large amount of money disappears into the pockets of corrupt officials and politicians.

The Biden administration wants to focus more on those problems.

I could agree, but I don’t think that’s enough given the depth of the problems that we see in some of the countries in the region.

So I suggest a completely different approach.

The Biden administration is launching a whole series of extremely ambitious initiatives in the domestic economy and society.

But the analysis made by the Biden government is very similar to what can be done in the Caribbean basin: there are problems of infrastructure, digitization, job training, health, education and also urban violence.

These are problems that are seen both in the US and in the countries of the Caribbean basin.

And what do you propose?

What I propose is that the government take many of the programs that are being designed mainly for the domestic economy and extend them throughout the Caribbean basin.

For example, the government has already said that many programs that have to do with climate change and clean energy should also be applied to the Caribbean basin, to try to move countries away from hydrocarbons, invest more in clean energy sources .

That is also true for digitization. Central America and the Caribbean have advanced dramatically in terms of internet access, but there is often a long way to go in smaller towns in rural areas, such as in the United States.

Similarly in infrastructure: roads, ports, airports … As we are doing in the US, we could help finance projects in Central America and the Caribbean.

Ultimately, investment and growth are needed to support good social programs and public sector spending.

The government has advocated for innovation centers or technology centers that it would help fund in the US And this is related to the issue of supply chains: American corporations have become very global in their sourcing policies.

Many of the US companies have located their production facilities in Asia, particularly China. We discovered over the years that this created certain vulnerabilities.

The Biden administration says it would like to see some of those supply chains moved from Asia to the US But in most cases that would not happen because we are not cost competitive on certain production lines.

My point is that some of these centers may also be located in Central America and the Caribbean, and that the US can help finance infrastructure, working with multilateral banks such as the Inter-American Development Bank and the World Bank, as well as with private sector investors, both international and national, to put these centers into operation.

That would create a lot more jobs in the region, to intertwine its economy with that of the US.

Which countries are you referring to exactly when you talk about the Caribbean basin?

I am referring to Central America, not just the northern zone —which is what the Biden government focuses on due to immigration— but it would include Nicaragua, Costa Rica and Panama. And then the Caribbean islands, Colombia, Venezuela, which of course is a special case but is part of the basin, and Mexico.

How do you suggest financing this expansion of domestic programs to the region when there are already questions about how the Biden government can finance them at the national level?

If you include the programs in a foreign aid budget, it is very difficult to get Congress to pass them.

So what I suggest is to include the programs in these great domestic initiatives. Biden has advocated for $ 2.7 billion in the Build Back Better Initiative , also known as investing in jobs.

How will they be paid? There are basically two sources: the tax hike, which is what Biden has proposed, and the financing of the deficit. Because interest rates are very low, the government can issue bonds with modest interest rates in the future.

The US already has a free trade agreement with Mexico and another with Central America plus the Dominican Republic that liberalized trade and services. But that did not help reduce the flow of migration, violence or corruption in the region. Why would an initiative like the one you propose have a better result?

These various business initiatives have created many jobs in the region.

On the US-Mexico border there are something like 2 million Mexicans working in maquilas or supply chains linked for the most part to US manufacturing companies.

Trade agreements cannot solve all problems. The fact that there are problems of corruption and inequality in Mexico is not the fault of NAFTA, which did what it is supposed to do: increase commercial investment flows and create more jobs in Mexico.

Similarly in Central America. There are some 500,000 jobs in the region that support perhaps 2.5 million Central Americans in supply chains alone. That is a contribution.

You cite the example of the maquiladoras and propose the creation of different centers in the region to produce for the US market. What would be the difference between these centers and the factories created by free trade agreements that are now seen as symbols of poor labor standards?

Who considers them? If you were a young woman in Central America with six to nine years of education, you would be happy to get a job in one of those factories. I am telling you this because I have talked to a lot of people there.

Now, could conditions improve? Yes, of course. What I am advocating is that the US signs social agreements with host countries that include protections for workers’ rights, the environment, and community rights.

And there would be extensive supervision: national and international auditors of compliance with the agreements.

Another of the great problems of the region is corruption. How would you prevent any investment from ending up in the pockets of officials?

As a requirement for these agreements, oversight mechanisms could be created, including the US government, with agencies that would have their offices in the field, so that there is full transparency to limit corruption.

I am not going to tell you that they are going to eliminate it overnight. But you can put in place mechanisms that provide some guarantees, and then, over time, try to strengthen national institutions and staff training.

You have warned that the US employment plan presented by Biden for domestic politics could harm the Central American economies. Why?

That is if you are serious about wanting American companies that source their supply chains from factories abroad to return to the United States.

There are around 500,000 jobs in Central America alone, and if each worker supports a family of five, there are 2.5 million citizens who would potentially lose their jobs and family income.


  • Gerardo Lissardy
  • BBC News World, New York