- The Chilean president announces a new reform on the exploitation of lithium
- Private operators will have to partner with a state-controlled company (which will have a majority stake)
- Chile and the second largest lithium producer
As we move towards the electrical transition, lithium, used to manufacture batteries, is becoming a strategic raw material. And a few days ago, the second largest producer in the world, Chile, made a shocking announcement. During a speech broadcast on television, President Gabriel Boric announces his intention to change the rules governing the exploitation of lithium in the country.
“This is the best chance we have to move to a sustainable and developed economy. We can’t afford to waste it”, did he declare. In essence, Chile wants to have more control over its lithium.
According to the explanations of the Associated Press, if the plan of Gabriel Boric materializes, the companies which wish to exploit the Chilean lithium will have to associate with a new company controlled by the State. And this company will have to have a majority stake in all partnerships.
Nationalization (or not) of lithium
Can we speak of nationalization? The term is controversial. Indeed, while wanting to control the exploitation of its lithium, Chile does not exclude investors. It would therefore be more of a happy medium between two models. Moreover, this rule only concerns future operations.
Indeed, existing contracts will be honored. Currently, two companies operate the country’s lithium: Albemarle Corp. and SQM, whose concessions expire in 2043 and 2030. And according to the Chilean president, the state will also seek to increase its stakes in these companies.
But for the new Chilean state-controlled company to be created, the president will still have to get the green light from the legislature. In the meantime, the government would like to use existing state-controlled companies: the copper producer Codelco and the mining company Enami. Moreover, Chile does not only want to better control the exploitation of its lithium. He also wants to promote the transformation of the raw material on site.
In any case, Chile’s decision is less radical than that of Mexico which, in 2022, decided on the outright nationalization of its lithium. As reported by our colleagues from France 24, the parliament has adopted a law proposed by the Mexican president which gives the state full control of the exploitation of lithium, without the participation of private operators.
