Chile, the second largest lithium producer in the world, seeks with the support of private companies not to lose its position

Chile, the country with the most reserves of lithium in the world and the second producer after Australia, seeks to join the boom of this mineral, essential for electric car batteries, with the first tender it awarded this Wednesday, for 160,000 tons of this raw material, and which was opposed by sectors of the Chilean left.

With about 30% of global production and the largest world reserve -located in the Salar de Atacama, in the driest desert in the world, in the north of the country-, Chile, together with Argentina and Bolivia, forms the so-called “Lithium Triangle “, Which keeps more than half of this” white gold “in brines.

The fever for electric cars and the incessant manufacturing of computers and cell phones has increased the price of lithium more than 500% in the last year, according to Trading Economics, and its main importers are China, Japan, South Korea and the United States.

Australia surpassed Chile as the main producer in 2017 and now holds 46% of the total, while China and Argentina have increased their competitiveness and follow the Latin American country with 10% and 9% market share, respectively, according to official figures.

With the aim of not being left behind, the Chilean Government has now hurried – two months after the end of the mandate of Sebastian Piñera-, a strategic plan to increase the amount of this raw material that is in private hands.

“The lithium triangle”

According to data from the United States Geological Survey (USGS), the “Lithium Triangle” brings together almost 50 million metric tons of this mineral, and the largest reserves (the exploitable lithium fraction) are found in Chile (9.2 million).

The three countries that make up this area have exploited the resource with different returns: Argentina has expanded its project portfolio, Bolivia seeks to attract foreign investment with State control, and Chile has kept it in the hands of two large private companies (the Chilean SQM and the Albemarle).

For the academic Manuel Reyes, an engineer from the University of Talca and an expert in deposits, the current Chilean model, based on the extraction and sale of raw material by companies, “is still very profitable.”

“We do not have the level of development that the processes require to give added value to lithium. We would not be competitive with other countries ”, he explained.

How to stay competitive?

Last October, the Government announced a tender for 400,000 more tons of metallic lithium to be placed in the hands of private companies that promote its exploitation and maintain the country’s position in international markets.

Finally, a total of 160,000 tons – 1.8% of the known reserves – were awarded between two companies that will be able to extract and commercialize lithium until the year 2050: the Chinese BYD (80,000 tons) and the Chilean Servicios y Operaciones Mineras del Norte (others 80,000 tons).

“In 2016 we were the largest producer in the world. Today we fell to 31% and without new projects, in 2030 we will be at 17% “, justified this week in a public statement the Minister of Mining, Juan Carlos Jobet.

Along the same lines, the Economic Commission for Latin America and the Caribbean (ECLAC) projected that Chile’s share of the lithium market could fall to 15% in 2030 due to environmental concerns raised by these operations and due to the relatively low-income portfolio. small number of projects you have.

New Horizons

At the same time, the president-elect, the leftist Gabriel Boric, defends the creation of a national lithium company, as happened with copper when the state-owned Codelco was created in the 1970s, which handles around a third of the metal. country red.

Between Codelco and the large private mining companies, Chile produces 25% of the world supply of copper, an outstanding export product that contributed almost US $ 38,000 million in revenues to the country in 2020.

For now, the export of “white gold” is much lower in quantity and value (it accounted for US $ 632 million in revenue in 2020, 98% less), but concerns about what it might eventually mean for the country’s economy are they spread like wildfire.

Gonzalo Gutiérrez, academic at the University of Chile and coordinator of the “Red Litio y Salares: Ciencia y Futuro”, pointed out that a collaboration between the public and private sectors would be beneficial to add added value to the raw material and not only consider its extraction.

“Putting lithium in private hands is a slap in the face to the desire of Chileans to leave extractivism behind. We need a new development model that incorporates science and technology ”, he pointed out.

The issue of lithium is also in the mouth of the convention that drafts the new Constitution, where more and more voices are calling for the nationalization of the mineral.

Carolina Vilches, a constituent and environmental activist, denounced this week in a public statement that “the tender is a mooring for maintaining Chile’s extractivist economic model.”

“We must postpone this decision and await the changes proposed by this new ecological constitution and guarantor of rights,” he concluded.