Lithium and communities: the social license to operate in the Puna

What is the social license to operate

The social license to operate (SLO) is the degree of acceptance and legitimacy that a community grants to a productive project on its territory. Unlike environmental permits or mining concessions, it cannot be filed with any agency nor recorded in a docket: it is built over time through dialogue, trust, and the fulfillment of commitments made.

In the lithium industry, where projects are developed on salt flats located in territories inhabited by Indigenous communities, the SLO has become a determining factor. A company may have all its legal documentation in order and still see its operation halted if it loses the support of its social environment. That is why more and more investors now incorporate it as an explicit variable in their risk analyses.

The role of the Indigenous communities of the Puna

Argentina's salt flats of greatest interest—Hombre Muerto, Olaroz, Cauchari, Centenario-Ratones, among others—are located in the Puna region of Catamarca, Salta, and Jujuy, an area with a strong presence of Indigenous peoples, mainly Kolla and Atacama communities. These communities maintain a historical and cultural relationship with the land, where water and high-altitude wetlands hold a value that exceeds the merely economic.

The main point of tension usually revolves around the water resource. Lithium extraction through brine evaporation, the predominant method in the Puna due to its low cost, raises questions about the water balance of fragile basins. Communities demand clear information on water use and transparent monitoring, since their traditional activities—such as herding and subsistence agriculture—depend on that resource.

Free, prior, and informed consultation

The framework that governs the relationship between companies, the State, and communities is Convention 169 of the International Labour Organization (ILO), ratified by Argentina through Law 24,071. This instrument establishes the right of Indigenous peoples to be consulted in a prior, free, and informed manner about any measure or project that may affect their territories and ways of life.

Prior consultation is not a mere informational formality: it implies a good-faith process, with adequate timeframes and access to comprehensible information, aimed at reaching agreements. Its proper implementation is one of the great challenges for the sector in Argentina, given the diversity of provincial criteria and the absence of uniform national regulation. The omission or flawed fulfillment of this stage is one of the most frequent causes of conflicts and litigation.

How it affects the viability of projects

The absence of a social license has concrete and measurable impacts. Conflicts can translate into road blockades, construction delays, suspension of works due to injunctions and, in the most severe cases, project cancellation. Each month of paralysis represents significant costs in a capital-intensive industry, where a lithium project may require investments ranging between 400 and 800 million dollars before entering production.

Social risk also makes financing more expensive. Lenders and investment funds incorporate environmental, social, and governance (ESG) standards into their decisions, and demand evidence of solid community relations. A project with open conflicts faces higher capital costs or is directly excluded from certain international financing sources.

Best practices to build trust

The sector's most mature experiences show that the social license is sustained through long-term relationships rather than one-off compensations. Hiring local labor, supply agreements with local providers of goods and services, training programs, and agreed-upon community development funds are tools that generate shared value and reduce the asymmetry between the company and its surroundings.

Transparency in environmental monitoring is equally key. Participatory water control schemes, with accessible data verifiable by the communities themselves, help dispel the main concerns. The continuity and coherence of the relationship throughout the entire project life cycle—and not only during the approval stage—is what distinguishes a genuine social license from a fragile agreement.

The Argentine challenge: growing without ceasing to listen

Argentina is the world's fifth-largest lithium producer and aims to strongly scale up its production in the coming years, driven by new projects and by incentives such as the Incentive Regime for Large Investments (RIGI) in force since 2024. But that growth plays out in specific territories of the Puna, where social legitimacy is not an accessory but a precondition.

The challenge lies in reconciling the speed demanded by the global market with the timeframes of community dialogue and the demands of a fragile environment. Provinces, the national State, and companies face the task of professionalizing prior consultation and raising relationship standards. How they resolve that balance will largely determine whether Argentine lithium consolidates its place in the global energy transition in a sustainable and lasting way.