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Chile seeks to recover positions in disputed world race for lithium

Chile seeks to recover positions in disputed world race for lithium

The long-awaited announcement by the Chilean president, Gabriel Boric, on the National Policy of Lithiumone of his great campaign promises, reactivates the global race for Chili to exploit this mineral, essential for electromobility and for which the South American country has the largest exploitable reserves in the world.

Boric wants to place Chili as “the main producer” of the mineral in the world, a position it held until 2017, when it was replaced Australia. Its second place is now threatened by other countries: according to a study by the bank JPMorganin 2030 Chile could be in fourth position, behind the current leader, China and Argentina, which opted for strong investment in the sector.

To achieve his objective, the Chilean president proposed yesterday to create a National Lithium Company, which will be 100% state owned, but which may associate with private companies to develop projects and seek alliances through the state company copperCodelco, with private companies “for exploration, exploitation and value addition”. However, he stressed, it will be the State that will have the majority participation in the strategic initiatives.

Chile “arrives late”

The professor of Mining Engineering at the Catholic University Álvaro Videla alerted EFE that “The announced plans are for the medium and long term, but if something is not done soon, Chile’s production will fall to a reduced 15% in the world, when 5 years ago it was 49%.”. According to him, a lower participation of the private sector can “end up in a freeze“Because Codelco, which is a metallic mining company (although lithium is marketed as a non-metallic mineral), “does not have the personnel and industry knowledge to develop these projects”.

The businessmen expressed their opinion this Friday that in the Government’s proposal the private sector is “relegated to the background” and what is “a contradiction“require their capital without offering them”control of how it is invested”.

For the experts, Chile “he comes late” in its technical-mining progress: “There has been no development in the investigation and discovery of lithium reserves because there has not been enough interest from third parties or incentives from the State either.”, the director and general secretary of the Chilean Mining Chamber, Patricio Cartagena, told EFE.

Only two companies in the entire country can exploit Chilean lithium: Sociedad Química y Minera SQM, controlled by China’s Tianqi and the son-in-law of former dictator Augusto Pinochet (1973-1990), Julio Ponce Lerou, whose shares plummeted after the announcement of Boric, and the American Albemarle.

Chilean law limits the concessions for the extraction of the mineral only to those who had licenses prior to 1979. A decree of that year, in the context of the Cold War, declared the metal of “strategic interest” for its possibilities in nuclear technology: “For many years this situation was not even reviewed because lithium had no commercial interest until the last 15 years.”, recalls Cartagena.

“No more contracts can be given”

Despite the fact that there are about 60 salt flats in Chile, currently only one is exploited: the Salar de Atacama, the largest in Chile and the third largest in the world, which concentrates 90% of the lithium reserves in the country and 30% of world production.

Located in the north, according to experts, it is the best salt flat in the world due to its lithium concentration, location – it is 2,600 meters high – and solar evaporation conditions. However, local communities alert authorities and businessmen of the risk to their natural and ancestral heritage if the resource continues to be extracted from the deposit as up to now.

No more contracts can be given so that they come to extract lithium if we do not know the state of health of the salt flat, if we do not know if it can withstand the extraction that is currently being carried out or if the place has to begin to be recovered”, criticized Sergio Cubillos, a member of the Atacameño (Lickan Antay) community of Peine, located in the foothills of the Atacama desert.

Videla considers that “there are many other salt flats” to be explored and that have sufficient lithium concentrations “to compete equally” in the international market but, as Boric explained yesterday, the State will also participate in the extraction of lithium in the northern deposit through Codelco “before the expiration of current contracts”, which will have to be renegotiated.

With the exploitation of 81,000 hectares of this salt flat, SQM takes over 20% of world production through a lease that it maintains until 2030 with the Production Development Corporation (Corfo). Albemarle leases, until 2043, another 16,000 hectares. For these exploitations, in 2022 the Chilean State received more than US$ 5,000 million.

Source: EFE

Source: Gestion

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