How Chile wants to become the world’s leading producer of lithium, a metal essential to the energy transition

    The brine ponds and processing areas of the lithium mine of the Chilean company SQM (Sociedad Quimica Minera) in the Atacama desert, Calama, Chile, September 12, 2022.

    The announcement was highly anticipated. In a televised speech on Thursday, April 20, Chilean President Gabriel Boric (left) outlined the main lines of his “national lithium strategy”, a campaign promise. The plan is part of a desire to redistribute profits from the mining sector, one of the pillars of the Chilean economy. “It’s the end of a mining sector for a few”, said the president, in power since March 2022.

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    The lithium strategy, “it’s more wealth so that Chile can finance new schools, hospitals, police stations, in short, a more dignified life for all”, continued Gabriel Boric. The cornerstone of this project: the creation of a “national lithium company”the precise contours of which remain to be determined, which will be “participate in the entire production cycle of the ore”, announced the president. This is not a nationalization of existing private companies, but the establishment of a public-private partnership with these mining players.

    The emergence of this new structure, however, remains subject to the approval of Congress (where the government does not have a majority), via a bill to be presented at the end of 2023. In the meantime, the public company of the copper Codelco is already in charge of launching the State’s participation in the extraction of lithium, by forging partnerships with private companies.

    Taxation and energy sovereignty

    Exploration and exploitation contracts will also be awarded to Enami (national mining company) and Codelco. Currently, two private companies operate the Atacama lithium salar (1,500 km north of Santiago), the region from which the metal is currently mined in Chile: the American Albemarle and the Chilean SQM. Their concessions expire in 2043 and 2030 respectively.

    With this policy, Gabriel Boric intends to follow in the footsteps of socialist President Salvador Allende (1970-1973), who in 1971 nationalized the copper mines, baptizing the natural resource “the salary of Chile”. The country has, according to the authorities, 36% of the world’s lithium reserves, in the heart of the “golden triangle”. » supplemented by Argentina and Bolivia (which would account for two thirds of the reserves, according to the French National Center for Scientific Research).

    The country therefore dreams of being the number one producer on the planet. Currently, Chile accounts for 34% of world production, ahead of Australia. In 2022, lithium production represented 3% of the Chilean gross domestic product (GDP).

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