Buenos Aires Protests against IMF
Argentina's debt with the IMF at $33 billion is the highest in the world. Reuters

Peronist Finance Minister Sergio Massa placed first in Argentina's presidential election last weekend, surprising pollsters. Massa advances to a runoff scheduled for Nov. 19 against second-place finisher Javier Milei, the bombastic economist and leader of Argentina's Libertarian bloc.

With an economic crisis coinciding with a long-awaited boom in lithium exports, the winner of Argentina's presidential election -- Massa or Milei -- will oversee arguably the most critical multi-year period in economic history since the resumption of democracy in 1983.

Over the past year, Argentina has experienced near-hyperinflation and a foreign currency scarcity as central bankers struggle to repay a $33 billion debt to the International Monetary Fund -- the highest IMF debt in the world. Personal savings have evaporated, youth unemployment remains above 20%, and state institutions have been unable to adequately remedy the ongoing crisis.

The effective exchange rate of Argentine pesos to U.S. dollars rose more than 10% over the weekend in reaction to the election, a demonstration of the economy's fragility. Still, in contrast to this macroeconomic nightmare, Argentina's next president will likely have his fortunes quickly buoyed by growth in one of the country's most crucial export commodities: lithium.

Argentina's battery-grade lithium production is projected to grow exponentially in coming years, even challenging Chile and Australia as the world's largest producer by the end of the decade. Argentina has over 40 distinct lithium projects currently under construction with expected completion by 2030 (three are currently operational).

Though not as substantial a revenue source as oil and gas, this quickly approaching lithium boon could soon provide Buenos Aires with a valuable geopolitical bargaining chip as the global transition to electric vehicles intensifies and battery supply chains gain even greater importance.

In December, Argentina's complex web of challenges and opportunities will be taken on by either Massa, a longtime bureaucrat and icy negotiator, or Milei, a self-proclaimed anarcho-capitalist with limited public service experience and a long list of publicized oddities.

A Massa victory would bring few changes to Argentina's lithium sector. "Massa has been promoting his desire for a unity government from the beginning of the primaries," according to Ernesto Picco, an Argentine author and lithium-focused scholar at Universidad de Santiago del Estero.

Picco told International Business Times that Massa represents the status quo regarding lithium regulation. He would be expected to maintain close relationships with foreign miners as president, especially those based in China, as well as local political leaders in the three northern provinces that hold the vast majority of Argentina's lithium deposits (like Gustavo Sáenz, Massa's running mate in 2015, who now serves as Governor of Salta Province). Massa would be resistant to implementing or enforcing sweeping lithium reforms, like those proposed by Chilean President Gabriel Boric in April.

The impact of a Milei victory is less certain for Argentina's lithium industry. The Libertarian candidate hasn't released a comprehensive mining strategy, with mining reform likely being overlooked in favor of objectives like dollarizing of the economy and dismantling state institutions.

And even if Milei prioritized some kind of change to the lithium sector as president, his plans would need to pass through opposition supermajorities in both chambers of Congress. While Milei garnered 30% of the presidential vote, his congressional allies only captured 14% of the seats in the Chamber of Deputies, and 11% of senate seats.

Despite the high stakes of next month's runoff election, the course of Argentina's lithium sector will likely remain unchanged, absent a total economic collapse. Both Massa and Milei would be expected to leave in place the localized, provincially-regulated framework that has attracted extensive foreign investment in years prior.

The real question is not how either candidate will alter mining regulations, but whether they will even have the macroeconomic stability to capitalize on lithium in the years to come.