Chile’s President Gabriel Boric (37) wants to nationalize the country’s growing lithium industry. This should stimulate the economy and protect the environment. “This is an opportunity for economic growth that will be difficult to beat in the short term,” Boric said in a televised address. It is the best chance to switch to a sustainable and developed economy. The national lithium strategy aims to distribute the wealth created more fairly.
Chile has the world’s largest lithium reserves and is the world’s second largest producer of the metal after Australia. The raw material is used to produce batteries for electric cars needed. The demand is increasing rapidly with the transition to a climate-friendly economy. Mining is currently in the hands of industry giants such as SQM and Albemarle. You have contracts with Tesla, LG Energy or Mercedes-Benz.
State-owned company to control lithium production
Two years ago called Volkswagen, Mercedes predecessor Daimler, BASF and other companies set up a “Responsible Lithium Partnership” project. Under the direction of the development organization GIZ, ways should be sought to reduce the environmental risks of lithium mining in the Chilean Atacama Desert. According to Boric, local residents, including indigenous groups, should have more of the raw material exploitation in the future.
In the future, according to the plan, a state-owned company will have control over the extraction of the raw material in the course of public-private partnerships. Current contracts should not be terminated, but new licenses should only go to publicly managed companies. SQM’s contract runs until 2030 and Albemarle’s until 2043.
Plan needs parliamentary approval
Boric hopes that the companies will be open to state involvement before the licenses expire. The establishment of a state company must be approved by the Chilean Parliament. The President wants to present his plans there in the second half of the year. An attempt to change the mining rights last year met with strong resistance from the mining industry and fell through with the people’s representatives. Recently, too, the head of state bit on granite with some advances.
Albemarle said the announcement will not have a material impact on its business. Discussions on investments in growth and new technologies in Chile continued. SQM did not respond to a request for comment.
Prices rose in the lithium trade as the nationalization plan allayed concerns about oversupply of the commodity as a result of weaker EV sales China.
Cho Hyunryul, an analyst at Samsung Securities, said the contract terms for lithium mining in Chile are likely to become more difficult under government leadership. Mexico nationalized its lithium deposits last year. The country is aiming for a lithium alliance with the governments of Argentina, Bolivia and Chile. According to analysts, the move could lead to a shift in investments to other countries such as Australia.