Chile’s state-owned copper giant, Codelco, and private mining firm, SQM, recently signed a deal to significantly increase the extraction of lithium, a crucial mineral for the transition to cleaner energy sources. The partnership aims to boost the production of refined lithium in the Salar de Atacama from 2025 to 2060.
The Salar de Atacama, located in the desert of the same name, is a key area for lithium deposits in Chile. Together with Argentina and Bolivia, Chile forms part of Latin America’s “lithium triangle.” The demand for lithium has surged in recent years, driven by the global shift towards renewable energy and electric vehicles.
Production Goals and Ownership
Under the agreement, Codelco and SQM plan to extract an additional 300,000 tons of lithium between 2025 and 2030. From 2031 to 2060, the production target is set at 280,000-300,000 tons per year. Codelco will hold a 50 percent share, plus one, in the new partnership. The Chilean state stands to benefit significantly from the project, receiving 70 percent of the operating margin from 2025 to 2030 and 85 percent from 2031 onwards.
Chile’s President Gabriel Boric, a leftist leader, has expressed plans to establish a national lithium company similar to Codelco. This move reflects the country’s history of nationalizing mining firms in the 1970s to ensure state control over key resources. While Chile was once the leading lithium producer with a market share of 37 percent, it has since been surpassed by Australia. In 2022, Chile produced 243,100 tons of lithium, accounting for 34 percent of the global total.
The partnership between Codelco and SQM represents a significant step towards expanding Chile’s lithium production and solidifying its position in the global market. With a focus on sustainable energy solutions and resource management, this collaboration sets the stage for continued growth and innovation in the lithium industry.
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