Chile plans to nationalize lithium production as part of its new national policy

Chilean President, gabriel boricpresented on April 20, in a speech to the nation from the Palacio de la Moneda, the National Lithium Strategy, which aims to nationalize the production of this minerallowering the shares of mining companies.

First of all, the president highlighted that Chile is one of the countries with the largest lithium reserves in the world, since it concentrates around 40% of the metal that is a key component of electric vehicle batteries.

The president announced that the The State will participate in the entire production cycle of this mineral, creating a national lithium company for this purpose.

“The second semester of this year, after the dialogue that we will hold with the different communities that coexist with the salt flats, We will send to the Congress of the Republic the bill that creates the national lithium company“said the president.

Secondly, President Boric indicated that the exploration, exploitation and aggregation effort will be made based on the principle of virtuous public-private collaboration. In the event such a company is formed, the country’s state copper producer Codelco will control the company.

In that sense, he proposed that Codelco work with the two lithium producers to negotiate contracts in the future, although existing contracts would not be cancelled.

“I have instructed Corfo, the institution that manages our lithium reserves, to in turn mandate Codelco to search for the best ways to achieve, from now on, the participation of the Chilean State in the extraction of lithium in the Salar de Atacama. Thus , Codelco will be our representative before the companies that are currently in the Salar to have a State participation before the expiration of the current contracts,” he explained.

He also stressed that they will move towards the use of new lithium extraction technologies that minimize the impact on the ecosystems of the salt flats. “At the same time, we will promote research in the salt flats to find out how to take better care of them, for this we will establish a network to protect the salt flats, fulfilling the commitment of 30% of protected ecosystems by 2030,” he added.

Lithium giant SQM lost US$3.7 billion in value

Shares of SQM, which runs the planet’s largest and most profitable brine operation in the northern Chilean desert under a contract that expires in 2030, lost after noon on Friday. a record 18%, wiping out $3.7bn in market value. This as a consequence of the announcement of the Chilean Government, according to Bloomberg.

According to the news agency, there is still a lot of uncertainty about the new national lithium policyand SQM has yet to comment on the Government’s plan. For example, how would the state finance its share of existing operations and investments, and what role would it play in decision-making? If SQM is forced to withdraw after 2030, its approximate replacement value is about $5 billion, BTG Pactual analyst César Pérez-Novoa told Bloomberg.