Chilean state copper miners Codelco and Enami have held talks with private sector companies to develop lithium deposits in a country that has the world’s largest reserves of the metal for batteries.
Copper giant Codelco and Enami, which provides services to small and medium-sized producers, will represent the state in new lithium projects, as it will take “a few years” to create an independent national lithium company, Mining Minister Marcela said in an interview. Hernando.
The government of President Gabriel Boric expects to present this week its long-awaited lithium development strategy, in which companies will partner with the state on new projects. It also plans to send to Congress this week a bill to create the state-owned lithium company. But until that happens, the new joint venture model will start through Codelco and Enami.
“There are some confidentiality agreements that have been signed and each one of them has had conversations,” Hernando said on Monday on the sidelines of a sector conference in Santiago.
The negotiations are separate from Codelco’s lithium exploration in the Maricunga salt flat, the official said, adding that some of the prospective projects have already been explored.
Chile is trying to attract private capital to the industry, while maximizing tax revenue, defending the environment and expanding downstream operations. Currently, production is limited to two companies—SQM and Albemarle Corp.—from a single, albeit gigantic salt flat. The country is losing market share just as demand for the key battery ingredient is accelerating.
In addition, one of the main issues that the new policy is expected to define is the tax treatment of revenues from lithium. The reason? There would be a certain gap regarding whether ore extraction should pay a specific mining tax (royalty). A debate that addresses a report prepared by the auditor PwC Chile, in which it warns about the different interpretations that have arisen around the taxation of the so-called “white gold”.
PwC’s Tax & Legal partner, Loreto Pelegrí, explains that today the specific tax on mining activity, which will be replaced by the royalty currently pending in the Senate, taxes the mining operating income obtained by a mining operator. The latter refers to any natural or legal person who extracts mineral substances of a “concessible” nature and sells them in whatever productive state they are in.
It is precisely the “concessible” nature of the mineral that is the key factor that defines its tax treatment, says the lawyer.
