The lithium business in Chile, the second-largest producer of the metal necessary for electric vehicle batteries in the world, will be nationalized, according to President Gabriel Boric of Chile, in order to strengthen the nation's economy and safeguard the environment.
The unexpected action in the nation with the greatest lithium reserves in the world would eventually hand over management of Chile's sizable lithium operations from industry titans SQM and Albemarle to a different state-owned business.
As more nations work to conserve their natural resources, it presents a new issue for electric vehicle (EV) producers who are frantically trying to get battery materials. Last year, Mexico nationalized its lithium reserves, and in 2020, Indonesia forbade the export of nickel ore, a crucial component of batteries.
"This is an opportunity for economic growth that will be difficult to beat in the short term," Boric said in an address televised nationwide.
According to him, only public-private partnerships under state control would be used to issue future lithium contracts.
"This is the best chance we have at transitioning to a sustainable and developed economy. We can't afford to waste it."
While he did not specifically mention Albemarle and SQM, the world's top two lithium producers, the government stated it would not cancel existing contracts and hoped businesses would be open to state participation before they expired. Specifically, SQM's contract will end in 2030, whereas Albermarle's will in 2043.
Tesla Inc., LG Energy Solution Ltd., and other EV and battery makers are supplied by SQM and Albemarle, formerly known as Sociedad Quimica Y Minera de Chile.
Albemarle stated that the announcement would not "materially impact our business" and that it would continue to discuss ways to invest in Chile's future growth and adoption of cutting-edge technology.
There were no comments on the issues from SQM.
The long-term supply partner of SQM, the South Korean battery manufacturer SK On, said it will keep an eye on the situation and take a long-term approach to its response.
Because EV demand in China, the world's largest vehicle market, has been declining since November, the statement by Chile did not cause a turnaround in lithium prices, which have fallen more than 70% since that time.
As of 03:13 GMT on Friday, the most actively traded lithium carbonate futures on the Wuxi Stainless Steel Exchange in China were down 6.2%.
"When or if battery makers renew their contracts with lithium firms in Chile, contract conditions would likely become more difficult than what they saw in the past when there was no state involvement," said Cho Hyunryul, an analyst at Samsung Securities.
In order to establish a lithium corporation that is entirely owned by the state, Boric said he would start a conversation with communities, businesses, and parliamentarians. In the second half of the year, he would then ask Congress to approve the idea.
Many of Boric's more ambitious initiatives have been restrained by Congress, which rejected a proposed tax reform bill in early March.
The largest copper producer in the world, state-owned Codelco, will be tasked with determining the best course of action for government involvement in lithium extraction.
"If a public-private company is created to exploit lithium in the Atacama salt flats, it will be controlled by the state through Codelco," Boric said.
Before the national lithium business is founded, areas where there are now private projects will be awarded exploration and extraction contracts to Codelco and state miner Enami.
A section will be created that will focus on developing technology to reduce negative environmental effects, such as favoring direct lithium extraction over evaporation ponds.
Summit Nanotech Corp, a privately held company that is working on developing direct lithium extraction technology, applauded the news.
Boric stated that the nation would work to maintain biodiversity and distribute mining advantages to local people and indigenous populations.
"Today we present a national lithium strategy that's technically solid and ambitious," the president said, adding it would build "a Chile that distributes wealth we all generate in a more just way".
(Source:www.investing.com)
The unexpected action in the nation with the greatest lithium reserves in the world would eventually hand over management of Chile's sizable lithium operations from industry titans SQM and Albemarle to a different state-owned business.
As more nations work to conserve their natural resources, it presents a new issue for electric vehicle (EV) producers who are frantically trying to get battery materials. Last year, Mexico nationalized its lithium reserves, and in 2020, Indonesia forbade the export of nickel ore, a crucial component of batteries.
"This is an opportunity for economic growth that will be difficult to beat in the short term," Boric said in an address televised nationwide.
According to him, only public-private partnerships under state control would be used to issue future lithium contracts.
"This is the best chance we have at transitioning to a sustainable and developed economy. We can't afford to waste it."
While he did not specifically mention Albemarle and SQM, the world's top two lithium producers, the government stated it would not cancel existing contracts and hoped businesses would be open to state participation before they expired. Specifically, SQM's contract will end in 2030, whereas Albermarle's will in 2043.
Tesla Inc., LG Energy Solution Ltd., and other EV and battery makers are supplied by SQM and Albemarle, formerly known as Sociedad Quimica Y Minera de Chile.
Albemarle stated that the announcement would not "materially impact our business" and that it would continue to discuss ways to invest in Chile's future growth and adoption of cutting-edge technology.
There were no comments on the issues from SQM.
The long-term supply partner of SQM, the South Korean battery manufacturer SK On, said it will keep an eye on the situation and take a long-term approach to its response.
Because EV demand in China, the world's largest vehicle market, has been declining since November, the statement by Chile did not cause a turnaround in lithium prices, which have fallen more than 70% since that time.
As of 03:13 GMT on Friday, the most actively traded lithium carbonate futures on the Wuxi Stainless Steel Exchange in China were down 6.2%.
"When or if battery makers renew their contracts with lithium firms in Chile, contract conditions would likely become more difficult than what they saw in the past when there was no state involvement," said Cho Hyunryul, an analyst at Samsung Securities.
In order to establish a lithium corporation that is entirely owned by the state, Boric said he would start a conversation with communities, businesses, and parliamentarians. In the second half of the year, he would then ask Congress to approve the idea.
Many of Boric's more ambitious initiatives have been restrained by Congress, which rejected a proposed tax reform bill in early March.
The largest copper producer in the world, state-owned Codelco, will be tasked with determining the best course of action for government involvement in lithium extraction.
"If a public-private company is created to exploit lithium in the Atacama salt flats, it will be controlled by the state through Codelco," Boric said.
Before the national lithium business is founded, areas where there are now private projects will be awarded exploration and extraction contracts to Codelco and state miner Enami.
A section will be created that will focus on developing technology to reduce negative environmental effects, such as favoring direct lithium extraction over evaporation ponds.
Summit Nanotech Corp, a privately held company that is working on developing direct lithium extraction technology, applauded the news.
Boric stated that the nation would work to maintain biodiversity and distribute mining advantages to local people and indigenous populations.
"Today we present a national lithium strategy that's technically solid and ambitious," the president said, adding it would build "a Chile that distributes wealth we all generate in a more just way".
(Source:www.investing.com)
