Chile Expands Lithium Production through Public-Private Partnership

Chile’s state-owned copper giant Codelco has recently entered into a partnership with SQM, a private mining firm, to significantly increase the extraction of lithium. Known as “white gold,” lithium is a crucial mineral in the transition to cleaner energy on a global scale. This partnership aims to establish a public-private partnership that will oversee the production of refined lithium in the Salar de Atacama from 2025 to 2060.

The Salar de Atacama, located in Chile’s desert of the same name, is home to the primary deposits of lithium in the country. This region, along with Argentina and Bolivia, is part of Latin America’s “lithium triangle.” The demand for lithium has surged in recent years as the world strives to reduce reliance on fossil fuels to combat climate change. Lithium is a critical component in the production of electric vehicle batteries.

Under the agreement, Codelco and SQM plan to extract an additional 300,000 tons of lithium between 2025 and 2030. They aim to achieve an annual production target of 280,000 to 300,000 tons from 2031 to 2060. In 2023, SQM produced 169,000 tons of lithium. Chile’s President, Gabriel Boric, who took office with a focus on establishing a national lithium company similar to Codelco, will see Codelco owning 50 percent of the shares, plus one, in the new partnership.

According to the statement released by the companies, the Chilean state is set to receive around 70 percent of the operating margin generated by the increased production between 2025 and 2030, with the share rising to 85 percent from 2031 onwards. While Chile was the world’s leading lithium producer until 2016, capturing 37 percent of the market, it has since been surpassed by Australia, producing 243,100 tons by 2022 – equivalent to 34 percent of the global total.

The partnership between Codelco and SQM represents a significant step towards expanding lithium production in Chile and strengthening its position in the global market. The focus on cleaner energy solutions and the growing demand for electric vehicles make lithium a crucial mineral for the future. By leveraging the expertise of both companies and establishing a long-term production plan, Chile is poised to play a key role in meeting the world’s lithium needs in the coming decades.