New lithium contracts attract interest from 57 companies in Chile

In the latest sign of how hot the lithium market is right now, 57 companies have shown interest in new contracts to explore and produce the metal used in batteries in Chile, the government reported.

Although the bidding process is still in an early stage, authorities expect to hear about the contracts later this year, before the change of government in March.

“Looks very promising”, Said late Monday the biminister of Energy and Mining, Juan Carlos Jobet, in an interview with Bloomberg TV.

Chile, the largest lithium producer after Australia, has seen its market share decrease in recent years. Now, it wants to open up its huge reserves further, as growing demand for electric vehicles promises to keep supplies of the battery component tight for years to come.

A benchmark lithium index has more than doubled this year and prices in China have hit records.

There is no doubt that there is some political risk for potential bidders in Chile. The process is taking place on the eve of this month’s presidential and parliamentary elections and as President Sebastián Piñera faces a constitutional impeachment to remove him.

At least one opposition senator has accused the center-right government of trying to rush new contracts at a time when the country is reassessing its stance on natural resources while drafting a new constitution.

Albemarle Corp., one of only two existing producers in Chile, bought the bidding rules, but said that part of its due diligence is to evaluate the position that the next government will have in this process.

Companies that are awarded five contracts to produce up to 80,000 metric tons each for 20 years will have to carry out exploration work and process all the necessary permits before they can develop the projects.

Chile produced about 18,000 tons of the metal last year, according to the United States Geological Survey.