Chile to Nationalize Lithium Industry


Chile to Nationalize Lithium Industry
A view of lithium reserves in the salar de atacama at the Atacama desert in Chile. © Jose Luis Stephens

Chilean President Gabriel Boric Font unveiled a plan recently to nationalize the country’s lithium industry, declaring that the nation should make the most of a rare economic opportunity.

The young, left-leaning leader wants to designate a government entity that would eventually take control of the private companies that have made Chile the world’s second-largest lithium producer. He set goals to further ramp up Chile’s output while also protecting the environment and the rights of indigenous people living near lithium resources.

In an April 20 national address about the plan, Boric said his administration will flesh out an initiative for the legislature to consider in the second half of this year.

“Our challenge is for our country to become the main lithium producer in the world, thus increasing its wealth and development, distributing it fairly while protecting the biodiversity of the salt flats,” Boric said.

Lithium demand has risen rapidly with the quick ramp-up of electric vehicles because it is a key ingredient in lithium-ion batteries, the technology powering most EV models. Lithium is also a key ingredient in the most popular types of thickeners used to manufacture lubricating greases, and competing demand from EVs has driven up costs for grease manufacturers.

The government has already begun talks with SQM, a Chilean company that is one of the nation’s two main lithium producers, about how to integrate SQM into a nationalized industry. The other main producer, United States-based Albemarle Corp., has stated its eagerness to start discussions, too, according to news reports.

Chile is one of a growing number of countries rushing to ramp up lithium production in order to take advantage of demand from EVs. Many of those countries – along with nascent producers – are also developing regulations aimed at ensuring that their resources are not exploited by foreign companies and nations.

Chile accounted for a quarter of global lithium production in 2021, ranking behind only Australia, which produced twice as much, and ahead of China, Argentina and Brazil. Chile’s production currently comes almost exclusively Salar de Atacama, a dessert salt flat in northern Chile where lithium is extracted from brine and processed into lithium carbonate.

As Boric noted, however, that the Atacama accounts for just a fraction of the country’s lithium reserves. He vowed to analyze other reserves, identify those that can be tapped most fruitfully and to develop modern methods to extract while also protecting the environment. Environmentalists have and neighboring residents have complained that lithium extraction damages important ecosystems and water resources.

Boric said he also wants SQM and Albemarle, along with other companies that enter Chile’s industry, to enter joint ventures with Codelco, that nation’s state-owned copper mining company, and for the state to own controlling stakes in their operations.

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