Lithium fever brings prosperity and headaches to one of the poorest corners of Brazil

For years, the Jequitinhonha River Valley, in southeastern Brazil, carried the stigma of being a very poor area, marked by the hunger and illiteracy. But it turns out that treasure was hiding in the parched, drought-hit land: enormous reserves of lithium — what some Brazilian politicians have called “white oil.”

The mineral — key to making batteries for smartphones or electric cars — has triggered a new global fever and filled this depressed region with optimism. But it has brought a worrying trail of collateral effects.

In the small city of Araçuaí, with just over 30,000 inhabitants, there is a feeling of euphoria. “We have a lot of hope. We can transform all this mineral wealth into good services for the population, to improve their lives,” says the mayor, Tadeu Barbosa, by phone.

For just over a year, the streets of this city of one-story houses and welcoming people have been bustling with workers from mining companies. Housing prices have skyrocketed and sometimes the supermarkets even run out of sliced bread, the mayor admits. This is the epicenter of Brazilian lithium production. Last year, the country produced 15.2 billion tons of this mineral, which is key to the green energy transition.

The triangle formed by Argentina, Chile and Bolivia is home to more reserves of lithium, but Brazil is rapidly escalating production and is already the fifth-largest producer in the world, according to Brazil’s Ministry of Mines and Energy. All production is in the state of Minas Gerais, most of it from the Jequitinhonha Valley, where Araçuaí is located.

Local authorities immediately recognized its value: lithium was seen as a golden opportunity to leave behind a past of misery. The governor of Minas Gerais, Romeu Zema, an ally of former president Jair Bolsonaro, presented the Lithium Valley Brazil project on the Nasdaq, the New York Stock Exchange, in 2023 with great fanfare. The company that has taken the lead is Canada’s Sigma Lithium. Just a year ago, it shipped the first tons of Brazilian lithium to China. The company claims to be the first mining company in the world to produce “green lithium,” because it uses clean energy, supplies itself with non-potable water and does not use tailings dams, which in this case, are prepared and sold to other companies.

This waste is easily seen from the houses of the small village of Poço Dantas, which is home to the families most affected by lithium extraction. Since the plant opened, they have been living with constant dust and the noise of the underground detonations to extract the mineral. Many of the humble brick houses have cracks.

“They advertise green lithium, that it is sustainable and such, but deep down it is not. It is greedy exploitation,” says Vanderlei Pinheiro de Souza, a resident of the rural area. He works in subsistence family farming, “what used to be called a farmer,” he jokes. He grows beans, corn and cassava for his own consumption and, when he has anything left over, he sells it to make money. Pinheiro de Souza feels that the company’s arrival is destroying the traditional way of life, and that the area’s already damaged natural balance is under even greater threat.

The Jequitinhonha Valley is a semi-arid region where the sound of water in rivers is heard only a few months of the year. Decades ago, eucalyptus monoculture dried out the soil. That’s why alarm bells went off when Sigma Lithium, which already has a plant running at full steam, asked for permission to do an “initial geological evaluation” in Chapada do Lagoão, a natural reserve with 139 springs that acts as the valley’s water pump. Both the city council and the company wanted to know how much lithium is hidden beneath this protected area. The authorization depended on the park’s governing council, made up of entities and people with diverse interests. It is led by Vanderlei, who says that he received a lot of pressure to give the go-ahead.

The permit passed by a slim majority of votes, but made little progress. The Movement of People Affected by Dams (MAB), which is very active against abuses by mining companies in the area, appealed to the courts and the Public Prosecutor’s Office called for the process to be stopped, arguing that the local communities —made up of a handful of quilombos, i.e. settlements founded by enslaved Black people fleeing forced labor — had not been consulted. In an email sent to EL PAÍS, the company says that the allegations that it sought to extract lithium from the natural park, causing significant damage in the process, were “completely false and unfounded,” and that it decided not to explore the area.

For the mayor of Araçuaí, that’s the end of the story. The biggest concern now is managing resources for a demographic boom the city is not prepared for. According to Sigma Lithium, in just one year, it has created a 1,000 direct jobs and 13,000 indirect jobs. With the arrival of new workers and residents, there is demand for more security, more hospital beds or more spots at school, and the city council and its small staff of officials are struggling to cope.

The needs have come before the promised resources that lithium would bring, confesses the mayor. In Brazil, the law stipulates that mining companies must pay 2% of the value of their sales to the state to compensate the regions where the minerals are extracted, and that 60% of the resources collected remain in the hands of the municipalities.

It sounds good in theory, but municipal coffers are not exactly in good shape. “It is far below what we expected. It is true that we are at the beginning of operations and adjustments have to be made, but last year we received two or three monthly payments and this year only one, in February,” he says. The mayor is confident that, if the situation normalizes, the city’s budget could grow by 5% thanks to the lithium royalties.

Despite the initial frustration, it is quite difficult for Barbosa to criticize lithium companies. And, in addition to providing work for residents, the large profits of these multinationals mean they can provide services the local government can’t afford. Sigma Lithium, for example, has a microcredit program that benefits 1,800 women, has paid for the renovation of a rural school and plans to donate 3,000 cisterns to the poorest families to store rainwater. Another mining company, Atlas, will put another plant into operation this year and has just paved a “fabulous” road, says the mayor.

“It’s the same old marketing,” Nicolly Caroline, a member of MAB, the organization that prevented Sigma Lithium from exploring the lithium deposits in the natural park, criticized on the phone. She lists a long list of problems, from the dust that covers the city to the increase in gender violence due to the numerous foreigners who have been arriving in recent months. In her opinion, the lithium fever is bread today and hunger tomorrow.

“Of course, people need to work, to survive. But all these jobs are temporary. People who go to work in certain areas come home worse, due to respiratory diseases [...] then the company leaves and what we are left with are the impacts. We are a humble people, when will we be able to buy an electric car?” she asks.

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