Chile Leader Wants State to Share in Lithium Extraction

Apr 21, 2023
10:41 AM

A truck carries salt used as part of lithium processing at the Albemarle lithium mine in Chile’s Atacama desert, Monday, April 17, 2023. (AP Photo/Rodrigo Abd)

SANTIAGO, Chile (AP) — President Gabriel Boric has announced a plan to require that private companies take Chile’s government on as a partner in the extraction of lithium, which is in high demand around the world for use in electric batteries.

Boric, who spoke Thursday on a national media network, said the state will participate in the entire lithium production cycle in a “public-private collaboration” that the government will control.

“Any private company, whether foreign or local, that wants to exploit lithium in Chile must partner with the state,” he said.

Chile has the world’s third largest lithium reserves, at 9.6 million tons, behind Bolivia with 21 million and Argentina with 19.3 million, according to the U.S. Geological Survey. But Chile was the world’s second largest producer last year with an estimated 39,000 metric tons, after Australia, with 61,000 tons.

Boric wants to create a National Lithium Company to partner with private companies, but he conceded that likely will not happen quickly because it would require support from an absolute majority in both houses of Congress, which is fragmented among a variety of parties.

In the meantime, he said, the state National Copper Corporation will sign agreements with private parties for lithium extraction.

Currently, there are two companies that mine lithium in Chile: the U.S. company Albemarle and Chile’s Chemical and Mining Society (Soquimich), which has been controlled for three decades by Julio Ponce, whose father-in-law was the late dictator Augusto Pinochet. Boric said Ponce’s contracts will be respected.

Boric said that in addition to being involved in mining, the government will promote the development of lithium products with added value, with the goal of becoming the world’s leading lithium producer.

The minister of mining, Marcela Hernando, recently told Congress that the government cannot advance alone in the exploitation of lithium because “technology and knowledge are in private industry.”

A public-private partnership is needed, Hernando said, though he added that “the state is the owner of lithium,” which is an “uncompromisable” position of the government.

Soquimich paid more than $5 billion to the government last year from its mining of lithium, almost double the revenue generated by the state copper company. Albemarle’s payments totaled $600 million.

Specialists estimate the demand for lithium will increase considerably in the next two decades due to the transition toward renewable energy around the globe and the fact that electric vehicles use lithium batteries.