Plateau Energy Metals Inc. PLUUF

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Plateau Energy Metals Inc is an exploration stage company. The company is in the process of acquisition, and exploration, and evaluation of mineral properties in Peru. It is principally engaged in the exploration for uranium on its properties located in the Macusani plateau region of southeastern Peru and the Falchani lithium project.

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Plateau Energy Metals Inc. > Regarding the "lithium legislation" proposed by Congress

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Post by juanPeruon Sep 23, 2020 12:16am

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Post# 31602234

Regarding the "lithium legislation" proposed by Congress

PlU's last corporate update (1) says:

Recently, three projects of proposed legislation with special emphasis on lithium were introduced in the Peruvian Congress for debate and approval. The projects vary considerably in their approach, ranging from tremendous support from the State and its institutions and assistance for the private sector to develop the lithium market in Peru, to strict controls imposed by the State at all levels. As far as can be ascertained, all the proposed legislation highlights the strategic importance of lithium to the country, prioritizing the development of the sector and does not seem to preclude private ownership or development.

“The submission of three different lithium legislation proposals to Congress within a week demonstrates the interest that our Falchani discovery has generated in Peru,” Alex Holmes, CEO of the Company stated. (...)

Considering the very tumultuous political period that Peru as a country passes through at present, the Company believes that it is possible more projects may be submitted to Congress. As a result, it will take a while before any decision may be adopted with respect to the lithium industry. The Company expects that any such decision will be one that continues to encourage investment and ensure sustainable and responsible development in the country. In Peru lithium is considered a “non-metal” and does not currently require any specific regulatory/permitting framework for exploration, exploitation and processing.

Although it's true that three legislation proposals have been submitted regarding lithium, the PR didn't provide the context in which this has happened and the motivations behind the authors of these proposals, even suggesting that "it will take time before any decision may be adopted", which may not be a good description of what is happening in Congress.

The three proposals haven't been submitted to Congress by third people, they have been submitted by three different groups of congressmen to the Congress' Comission of Energy and Mines, chaired by Puno's congresswoman Yessica Apaza Quispe. And the reason of this submission is not to take any "decision" as to how (and by who) lithium should be mined, but rather to fill a void that these congressmen mistakenly thought there were in the peruvian mining legislation. Let's dive a bit deeper into this story.

Back in 2018, after the lithium discovery was publicly announced, President Vizcarra promised that in 6 months the government would ellaborate the legal framework required to mine the lithium and uranium in Falchani (2) but, as we all know, time went by and that didn't happen. Expectations were high in Puno, and that expectations rapidly evolved into impatience as months passed without news. So after Vizcarra disolved Congress back in September 30th, 2019, many of Puno's candidates for the new Congress centered their discourse around lithium and the opportunity its development would provide to Puno people. Among these candidates was precisely Mrs. Yessica Apaza, who was elected and finally became the President of the Congress' Energy and Mines Comission.

What happened after? Well, the congressmen lead by Mrs. Apaza sent a number of formal letters to Minem asking about the current state of the lithium project, why wasn't it being developed, what could they (the Congress) do to accelerate it? Minem's answer was always "the lithium project needs a special regulation (because of the uranium) which we're carefully developing". As you can see in the following interview Mrs. Apaza conceded to Rumbo Minero, it seems Minem's response wasn't enough for them (mark 5:37):

(...) Oscar Diaz (Rumbo Minero). Congresswoman, all economists inside and outside Peru agree that it is the mining sector, due to its size, because it is the one that brings the biggest investments to Peru, the prop that can get Peru out of the recession in which it is immersed, which could be exacerbated by Covid-19. What is your committee (Energy and Mines), which is crucial at this time, doing to support the Executive and to promote the growth of mining investment?

Yessica Apaza. Well, we have sent multiple letters to Minem, many of which have not been addressed so far. What we want is precisely to make this articulation and work hand in hand because this is going to help a lot to the economic impulse of our country. (...) And one of the projects that we have seen, and I say this with great pride, we have it in the Puno region, the lithium project, which since 2018 we have a promise from the President that this was already going to be developed, but we see that to date, year 2020, so far it has not happened, nothing is known, and every time we ask for this information from Minem they tell us "we already sent information, we already sent" ... the months go by, the years go by and so far we have nothing! So, we, as the Energy and Mines Commission, what we want is to promote the project, but for this we need the commitment of the Executive. By having the lithium project under development, this will help not only the Puno region, which is in total abandonment, but the entire country ...

Oscar Diaz. Congresswoman, in this program we have spoken on time, and right after this conversation our Wall Street financial analyst will speak from New York talking precisely about the potential of lithium, and indeed it is something not only for Puno but for the entire country. And it is true that there is a laziness in the Government, of which you speak, but I wanted to understand well. You say that you are trying to speak with the Executive authorities, that is, with the Minister of Energy and Mines ... Haven't you been listened by them? Don't they want to meet with you? What happens?

Yessica Apaza. Look, from the moment we took over the Energy and Mines Commission we have looked for these links. Moreover, in the first ordinary session we invited the Minister at that time, Mrs. (Susana) Vilca Achata, who coincidentally is also from the Puno region, and ... well, the only thing we have been able to obtain in the interviews, in the sessions we have had, I think there are two in which the Minister participated, we've got only commitments. But what our country needs is not a document or a meeting, it is more than that ... Then she left office, we have the current minister with whom we have also had a first virtual meeting, and also stopped there, they have not submitted any report to us. We have requested the reports regarding the lithium project, what state it is in, the country has to know how the process is, what is being done, what is the project lacking, what is the progress, but so far we have no pronouncement. That is why we make a call, it is time to join forces in favor of the thousands of Peruvians who today are on the streets, without a job, in the midst of the health crisis that we are experiencing in our country. And one of the most affected regions in recent months has been the Puno region ... having such a valuable resource, which is lithium, we are putting it aside... (...)".

Yes, these congressmen does not seem to understand the stages any project has no go through before starting production, but there's undoubtely a shred of thruth on Mrs. Apaza's claims. Anyway, the point is that, as Minem's response was always "we need an special regulation for the Falchani project" and the Comission headed by Mrs. Apaza wanted to help to make Falchani a reality, they didn't have a better idea than ellaborating themselves the regulation needed for the lithium industry (!). And so they organized themselves and submitted three different proposals:

1) Submitted on September 9th by Orlando Arapa (Accion Popular), it basically proposes (3) that all the activities related to lithium, from exploration to commercialization, are carried out directly by the State, without any intermediary. Isn't this project against the Constitution? Yes, it is, but no problem, because Mr. Arapa has recently presented a project to start a Plebiscite for a total change of the Constitution (4), as part of which the whole system of mining concessions would dissappear (!). Who is Orlando Arapa? Well, despite being elected for Accin Popular (which holds 25 seats of the 130 in Congress) he clearly doesn't represent Accion Popular's ideology, and after his continued confrontations with his colleagues because of his radical ideas, he's now considered a rebel inside that political party. But what turned on the alarm about his mental health was his recent statement that there were airplanes and drones "spreading" coronavirus in southern regions of Peru (5).

2) Submitted on September 11th by congressmen Robertina Santillana Paredes and Humberto Acuna Peralta (Alianza para el Progreso) proposing that the lithium exploitation is declared "of national interest", which would obligue the Executive (Minem) to swiftly ellaborate the "required" lithium regulations (6).

3) Submitted on September 15th by Mrs. Yessica Apaza (Union por el Peru), this one (7) also proposes that lithium exploitation is declared "of national interest". I guess this proposal and the previous one are what the PR was referring to when acknowledging "tremendous support from the State and its institutions and assistance for the private sector".

After receiving these "proposals", Minem's and IPEN's officials (IPEN = Peruvian Institute of Nuclear Energy) realized there were misconceptions about the legislation, and presented on September 16th before the Comission of Energy and Mines. Alfredo Rodriguez Munoz (Minem's General Director of Mining), Susana Petrick Casagrande (IPEN's President) and Julio Cesar Romani Aguirre (IPEN's radiation sfatey specialist) spoke about the progress being made on the regulations required for the Falchani project and to clarify why a lithium-specific regulation wasn't needed (8). As part of their exposition Mr. Rodriguez explained why it's necessary to regulate uranium before being able to extract Falchani's lithium (mark 16:22):

(...) We have a first layer, yellow in color, which is the uranium resources, and in the lower part, below the uranium deposit, we find the lithium deposit. That is why the regulations are being drawn up in order to better determine and characterize the exploitation, the benefit and the evaluation of environmental impact studies, since for the exploitation of the lithium layer, the uranium layer must necessarily be extracted. Here we have other cross sections, all these graphics come from Plateau Energy Metals. Here we have other cross sections, other areas, (...) and we have the yellow layers on both sides, which are the uranium layers, and just below them is the announced lithium deposit. This is another cross section, about which we're assuming that this uranium has irradiated the lithium deposit, therefore we must also take into account radiological safety characteristics for the exploitation of both deposits. (...)

Mr. Romani Aguirre (IPEN), whose slides are available online (9), also contributed to the explanation (mark 26:00):

(...) I also want to mention that uranium is more abundant than gold and silver. It is estimated that on average we can find up to 3 ppm in any ton of soil. To be exploitable, mining deposits have to have more than 200 ppm, and in some deposits it even reaches up to 20,000 ppm. Today it is recommended that all reservoirs that have more than 80 ppm should be subject to special regulation from the point of view of ionizing radiation. For your information, in Puno there would be concentrations greater than 300 ppm. (...)

Finally, at the Q&A section, Mrs. Yessica Apaza asked about the legislation proposals and Mr. Rodriguez answered (mark 1:00:30):

(...) Yessica Apaza: There being no more questions from the congressmen, well, ... also mention that in August 2018 the President announced that the regulatory framework would have to be drawn up in a period of 6 months, due to the discovery of lithium and uranium in the Puno region, and we see that so far it has not happened, or we have not been given information on how the procedure and progress are going. Those would be our questions, thank you very much to the guests, I give you the use of the word so that you can answer the questions and present your final comments.

Alfredo Rodrguez: We are going to answer the questions. Regarding the legislative measures proposed by the congressmen, these measures would not ... apparently they establish a different framework, don't they? As I pointed out, the general framework for uranium and lithium mining is already in place. What is lacking in regulation are the care or the conditions in which this mining is going to take place. In other words, in uranium mining drilling, blasting, crushing, grinding, flotation, thickeners, ... mining, as we know it in other mining units, is what is done. How does uranium mining vary? Over radiological safety conditions, which covers its entire development, from exploration to exploitation and closure of the unit. That is where radiological measurements have to be considered. For this we are coordinating with IPEN, in order to establish guidelines for the adequate development of these activities, as well as the development of competencies for the training and qualification of the appropriate personnel. (...) As for lithium, lithium has two characteristics, either it is a lithium carbonate or it is a lithium hydroxide. If it were a lithium deposit that is separate from the uranium deposit it would not carry any additional danger, so it would not need any additional regulation, the lithium would be sent directly to a place where they would convert it into cathodes, anodes, for the eventual production of batteries. (...)