How Lithium Royalties Are Distributed in Argentina: The Federal Framework Explained

The starting point: provincial ownership of the resource

The cornerstone of Argentina's framework lies in the National Constitution. Since the 1994 reform, Article 124 establishes that the original ownership of natural resources belongs to the provinces. This means that lithium—like all other minerals—is, in legal terms, the property of the province where the deposit is located, not the national State.

This feature sets Argentina apart from other producing countries where the subsoil is under national ownership. In practice, the three provinces of Argentina's so-called 'lithium triangle'—Jujuy, Salta and Catamarca—are the ones that grant concessions, oversee activity and, crucially, collect mining royalties. The federal government, by contrast, retains the power to enact the Mining Code and substantive legislation, but does not hold title to the resource.

What royalties are and how much they represent

Mining royalties are a payment made by companies to the province for extracting a non-renewable resource. The Mining Investment Law (Law 24,196) sets a maximum cap of 3% on the value of the mineral at the mine mouth—that is, the value of the product before processing, transport and marketing costs. Each province defines its effective rate within that framework.

In practice, lithium provinces apply rates close to that 3% on lithium carbonate or chloride. For a brine project producing tens of thousands of tonnes per year of battery-grade lithium carbonate, this can translate into provincial revenues ranging from several million to tens of millions of dollars per year, depending on international prices and each operation's volumes.

The federal government's role: taxes, not royalties

Although the federal government does not collect royalties, it participates significantly in the lithium rent through the general tax system. Income tax, VAT, social security contributions and, depending on the context, export duties, are the means by which the national State captures a share of the activity.

Added to this is its regulatory and coordinating role: the federal government negotiates investment treaties, sets exchange-rate and trade policy, and administers promotional regimes. The fiscal stability provided under Law 24,196—guaranteeing for 30 years that a project's total tax burden will not increase—is a commitment involving both the federal government and the adhering provinces.

Distribution within the province

Once the province collects the royalty, an internal redistribution mechanism usually exists. Several jurisdictions allocate a percentage of revenue to the municipalities where the activity takes place, or to specific funds for development, infrastructure or environmental sustainability.

Jujuy, for instance, has channeled part of the rent through its state-owned provincial company, which holds stakes in projects and earns dividends in addition to the royalty. Catamarca and Salta have explored trust funds and state equity participations. These schemes aim to ensure that mining wealth produces a local spillover beyond the formal tax.

How the RIGI interacts with the royalty framework

The Large Investment Incentive Regime (RIGI), in force since 2024, was designed to attract large-scale projects—with investments above USD 200 million—offering fiscal, exchange-rate and customs benefits, plus 30-year stability. Lithium is one of the sectors naturally covered by this regime.

A key point is that the RIGI does not eliminate provincial royalties: the 3% cap on the value at the mine mouth remains, since it is a provincial power over a resource under its ownership. What the regime does establish is a limit on additional tax pressure and guarantees of free availability of foreign currency. That is why, for a lithium project to fully access the benefits, the province usually needs to adhere to the RIGI, thereby aligning the national incentive with provincial ownership of the resource.

A federal balance amid expansion: the case of the Puna

Argentina's framework reflects a virtuous tension of federalism: provinces own the resource and collect royalties, but depend on macroeconomic stability and the regimes designed by the federal government for investments to arrive. In the Puna—where low-cost brines position Argentina as the world's fifth-largest producer—this balance largely defines the country's appeal.

For investors and officials, understanding this distribution is essential: Argentine lithium is not managed from a single decision-making center, but through the interplay between owning provinces, a national tax framework, and promotional regimes such as the RIGI. The quality of that coordination will, to a large extent, determine how much of the lithium rent is transformed into lasting development for high-altitude communities.