Codelco seeks to partner with SQM for lithium projects in Chile

Codelco, Chile’s main copper company, is conducting negotiations to partner with SQM and acquire a majority stake in future lithium projects in the country.

This agreement arises after the decision of Gabriel Boric’s government to create the National Lithium Company, announced last year, with the aim of increasing state control in the production of this key metal for batteries. However, the validation of this initiative by Congress is still pending, given that the ruling party does not have a majority.

The Chilean government’s strategic approach involves renegotiating existing contracts in the Salar de Atacama, Chile’s largest deposit and responsible for 30% of global lithium production. Codelco is seeking an agreement with the current salt flat operators, SQM and Albemarle. SQM, which has a majority Chilean shareholding with a 23% stake in Tianqi, and Albemarle, with US capital, are the main players in this sector.

SQM, which sold 157 thousand metric tons of lithium carbonate in 2023 (75% of Chilean production in 2022), owns 20% of global lithium production. Its current contract ends in 2030, while Albemarle’s contract extends until 2043. These agreements generate tensions between the large players in the lithium market in Chile and increase the country’s economic dependence on China, especially considering the strategic relevance of lithium for USA.

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Abel Piñones, lawyer and mining law academic, highlighted that this partnership between Codelco and SQM represents a significant economic commitment on the part of Chile. Piñones stressed that the Chilean State has a central role in the lithium market, with absolute control over the salt flats and the ability to execute projects directly or through concessions.

Regarding China’s role in this agreement and in the Chilean economy, Piñones mentioned that although China has increased its investment in mineral resources such as lithium, other countries are also involved in the Chilean mining industry. Foreign investment in Chile, including capital from Canada, Australia, the United States and Japan, is diverse and reflects global interest in the country’s mineral resources.

The strategic importance of lithium as a key resource for the energy transition is driving investment and development in this sector, with China playing a leading role in this global dynamic.

This partnership process between Codelco and SQM reflects the evolution of the lithium market in Chile and its impact on the country’s economy and politics, especially in the context of a transition towards more sustainable energy sources and the growing global demand for electric vehicles. and energy storage technologies.