Lithium tender at the end of Piñera’s government in Chile raises suspicions in Boric

The lithium tender that will be awarded less than two months before the term of Sebastián Piñera’s government in Chile, the world’s second largest producer of the metal, raised suspicions in the opposition and in the team of the president-elect, the leftist Gabriel Boric.

The auction seeks to award 400,000 tons of metallic lithium or 2′129,200 tons of Lithium Carbonate Equivalent (LME), the industry’s reference unit, divided into five quotas, with a period of seven years to carry out geological exploitation, the studies and project development.

The contract provides another 20 years for the exploitation of this light metal, considered key for the development of electric vehicles.

“Until 2016, Chile was the world’s largest lithium producer, with 37% of the market. But today we fell (to 32% in 2020) and we have been surpassed by Australia (46%) ”, said the Chilean Minister of Mining, Juan Carlos Jobet, to justify the process launched in October to regain the country’s leadership position in this emerging market.

“If we do not manage to increase production, by 2030 we will have fallen to 17% (of the world share),” added Jobet, who wants Chile to increase its production that year to 450,000 tons of SCL.

Due to its use in the manufacture of batteries for electric cars and electronic items, global demand for lithium is expected to grow 21% in 2030, according to a latest report from the Chilean Copper Commission (Cochilco), a technical body Chilean state

“This increase rests on the higher projected consumption of lithium ion batteries in the automotive sector. Indeed, we anticipate that the electric vehicle segment will go from representing 41% of aggregate lithium consumption in 2020 to 73% in 2030 ″, says a Cochilco report presented this week.

Also hand in hand with electromobility and demand from China, the price of copper – of which Chile is its main world producer, with more than 25% of global supply – reached record prices in 2021 in international markets.

“National Lithium Company”

The process being carried out by the Chilean government aroused suspicions in opposition legislators, who asked the justice to suspend the bidding, while a national demonstration was called on social networks for the afternoon of this Friday, under the slogan “To recover our resources ”.

“What the government of President Piñera is doing is putting the general interest of the Nation at risk,” Raúl Soto, a deputy from the opposition Party for Democracy (PPD), told the press after presenting a protection appeal for slow down the process.

For the president-elect, Gabriel Boric, who takes office on March 11, Chile cannot again make the “historic mistake of privatizing resources” such as lithium, as it did before with copper, which was finally nationalized in 1971 by the government of the socialist Salvador Allende (1970-1973).

Thanks to this action, the state-owned National Copper Corporation (Codelco) is the world’s main producer of the metal, in whose industry in Chile today the main private mining companies also participate, which together produce slightly more than 25% of the world’s supply.

In his program, Boric, who won in the second round with 55.8% of the votes, proposes the creation of a “National Lithium Company”, which develops a new national industry, with community leadership and adding value to production.

“What we would like is for this process to stop for a long time,” said Willy Kracht, coordinator of the Boric Mining team, who met with Minister Jobet on Wednesday, along with the president-elect’s campaign manager. , the doctor Izkia Siches.

However, Kracht acknowledged that the rules are not possible to modify but that they will seek to establish a “work table” to incorporate some conditions in the bidding contracts, the award of which must be known on January 14.

Five competing companies

Five companies, including the world’s largest lithium operators, the Chilean Sociedad Química y Minera de Chile (SQM), which extracts 17% of this metal in the world, and the American Albemarle, which produces 19%, presented economic offers for this tender of up to 61 million dollars for one of the five installments.

The tender does not establish the place of exploitation. According to the government, it corresponds to only 4% of Chile’s proven reserves and after the award, the projects must be subject to all current environmental regulations.