Chile gains strength in private lithium market

Chilean Finance Minister Mario Marcel announced this Tuesday that Gabriel Boric’s government has received 88 proposals from 54 companies from a dozen countries to exploit 26 salt flats available in Chile. On Monday night, the leftist administration closed the deadline for the private sector to show its investment interest. “For those who thought we were behind, we are moving fast,” said the Secretary of State at the Seventeenth Conference of Latin American Cities in Santiago, Chile, organized by the Council of the Americas (Americas Society/Council of the Americas). On July 9, the results of “a competitive process” developed this year to bid for lithium exploitation contracts in the South American country will be known.

“We are not going to implement our production in the next 10 to 15 years, we are going to implement it next year. And we are going to get a combination Adventures Public-private with completely private projects in the plurality of salt flats, while 30% of the salt flat area is preserved, ”explained Marcel. The head of Chile’s fiscal portfolio took advantage of the important event to establish relations with the business world in Latin America to send a message of peace to the region: a period of significant inflation, external imbalances and great exchange rate instability is a matter of the past. “This part of the work has basically already been completed, even if we have added other additional elements of instability on both the economic and political side. But all this has already been done,” Marcel said.

Maximo Pacheco, president of Chilean state-owned company Codelco, who attended the forum this morning after arriving from Europe where he was part of a delegation that visited President Gabriel Boric, said: “We all know that what we are doing is an energy transition and it is called decarbonising, combating climate change and at the end of the day electrifying the world. To do this, the world needs a lot of copper and a lot of lithium,” he said. Pacheco highlighted that Chile has one of the largest copper reserves in the world and, in terms of lithium reserves, is the so-called lithium triangle formed by Chile, Bolivia and Argentina. “Bolivia has more than we do, but lithium in Bolivia comes with magnesium and lithium requires almost perfect purity levels,” he added.

Codelco and Sociedad Química y Minera de Chile (SQM) reached an agreement for the joint exploitation of lithium in the Atacama salt flat. The public-private partnership, details of which were known at the end of May, will involve the creation of a new company that will begin operations in January 2025, where the state company will have the majority of shares (50% plus one), and will allow them to produce the so-called white gold until 2060. With this, the Chilean state will enter directly as the creator of a thriving mining industry. “Our goal is not just to increase production. We are not only saying that we are going to produce more lithium with less water, but we are also creating a public-private model that many view with distrust. The good thing is that neither Codelco nor SQM view it with distrust,” he assured.

“But here is the bad news,” Pacheco warned after describing the opportunities for the South American country’s mining industry. In 1990, Chile produced one and a half million tons – 1.2 million from Codelco – and by 2004 that figure had risen to 5.5 million tons, he said, mainly because the world’s largest mining companies moved here. “Our copper production here has been stagnant for 20 years. They ask us questions about how much they will be able to increase their production to meet this unsatisfied demand if the world needs copper. Our response is not very clear, because we have a lot of pending issues,” Pacheco said in relation to the need to develop mining, innovate and build social legitimacy to do different mining that does not use continental waters.

Copper in Chile is produced in desert areas where water is very scarce. Codelco consumes 5,500 liters of water per second. “With 10% of the total demand of Chilean society, we are the number one electricity consumer in Chile,” said the president of the state copper company. “If Chile does not increase its copper production, Chile is making life more difficult for the planet in its energy transition. This is a message we hear clearly in Europe and the world.”

Marcel emphasized that Latin America is going through a special moment of international attention and the important thing is how countries will take advantage of it because “this will not last forever.” In the case of Chile, he said that the South American country’s source of comparative advantage is not only non-renewable natural resources, but also lithium, renewable energy, green energy production and the digital economy. And that’s where they are taking the first steps.

The Council of the Americas decided to hold the event in Chile because of “its stable economy, strategic location and commitment to sustainability”. Chile’s economy grew 3.5% in April and the outlook for financial institutions is that GDP will grow between 2.6% and 3.1% in the second quarter, the largest increase in two years. Susan Segal, president of the American trade organization, this morning highlighted how the production and export of strategic resources such as copper, lithium and green hydrogen is allowing Chile to consolidate itself as a “protagonist of the energy transition”.

Segal, very knowledgeable about Chile’s reality, said, “Chile has the opportunity to become an investment destination that provides added value to products in the manufacturing chain, which will create more quality jobs and increase economic activity.” But as Minister Marcel warned, Latin America is going through a special moment of great international attention and we must know how to take advantage of it because “it will not last forever.”

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