Since President Gabriel Boric presented his national lithium policy last week, the proposal has been closely watched, both inside and outside Chile's borders.
But the desire for the Chilean State to take control of an industry considered strategic for technological development generated various reactions.
Here, the keys to understanding what is at stake.
What is lithium?
Lithium is a white, chemically reactive metal that is used as the basis for the manufacture of lithium-ion batteries, key to storing energy in a light and rechargeable way.
Its use in computers, mobile phones and other digital devices has boosted its demand in recent years, but the boom in electric vehicles – which is estimated to account for 60% of new car sales by 2030 – is expected to finally skyrocket. the use of the metal, known as
white gold
.
According to the projections of the Chilean Copper Commission (Cochilco), the demand for lithium by 2030 will grow 21% annually.
In recent years, lithium experienced a boom and its price went from 6,000 dollars a ton to over 80,000 dollars a ton at the end of last year (although in recent months it registered a strong correction and today it is trading around 30,000 dollars the ton).
In 2022, lithium sales from Chilean territory increased 777% to 7,763 million dollars.
It became the country's main export – without counting copper – and generated tax revenues of 5,000 million dollars.
An electric vehicle charging station in Bilbao (Spain), in February of this year. VINCENT WEST (REUTERS)
How is it extracted?
Lithium mining is carried out through two types of deposits: brines and foamodene, a rock that is found abundantly in Australia and which, after being excavated, crushed and roasted, makes it possible to isolate 6% of the lithium it contains.
On the other hand, brine, the type of deposit that predominates in Chile, is found in salty lakes and the extraction processes are carried out through evaporation.
Chile has 63 saline environments, of which 18 correspond to saline lagoons.
The Salar de Atacama, located in the Antofagasta region, in the north of the country, concentrates 90% of Chile's lithium reserves.
It is there where the American company Albemarle and the Chilean SQM, linked to the ex-son-in-law of Augusto Pinochet, Julio Ponce Lerou, exploit the mineral today.
Both have a lease with Corfo, the Chilean investment promotion agency, which expires in 2043 and 2030, respectively.
Who takes the lead in the world?
Chile was the world's leading lithium industry until 2015, when it was replaced by Australia.
In 2022, the oceanic country had an estimated production volume of 61,000 metric tons, followed by Chile (39,000) and China (19,000).
In Latin America, Chile leads the way, but Argentina is fast approaching.
According to a report from the US bank JP Morgan last February, in 2030 Argentine production would surpass Chilean production.
What is the national lithium policy recently announced by Boric?
This is a campaign promise by Gabriel Boric that materialized on Thursday of last week.
That day, on national television, the president announced the creation of a National Lithium Company that will be presented as a bill to Congress, after consulting the communities and the protagonists involved.
In addition, the president indicated that exploration and exploitation contracts will be awarded to Enami (National Mining Company) and Codelco (the state copper company) in those places where there are currently projects in different stages of development.
He also ratified that the exploration, exploitation and value-added development effort will be carried out through public-private collaboration, but always with the State as controller of the projects.
President Gabriel Boric Font during a tour of the lithium exploitation zone in Antofagasta.GabrielBoric (Twitter)
What will be the role of the copper company Codelco?
The state copper company was mandated through Corfo to manage to negotiate with the companies that currently operate in the Salar de Atacama, Albemarle and SQM, to ensure that the State manages to enter this reserve before the expiration of their contracts.
In any case, the Government made it clear that they will respect the current agreements that they have with both companies.
Codelco's board of directors must determine the terms of the negotiation.
The state copper company will be the instrument through which different world companies that have already expressed their interest in participating in this development in Chile can enter the local industry.
Will the extraction model change?
One of the points that the Chilean government highlighted in its announcement is that the new strategy seeks to advance better environmental standards in the lithium industry.
Along these lines, La Moneda announced that research in the salt flats will be promoted and a protection network will be established, fulfilling the commitment of 30% of ecosystems protected by 2030. Likewise, progress will be made towards the use of new direct lithium extraction technologies with reinjection of brine (instead of evaporation), to minimize the impact on the ecosystems of the salt flats and better water management in their production.
It is estimated that each ton of lithium requires the evaporation of two million liters of water.
How did the private world and industry react?
Initially, the main Chilean trade unions reacted against the new strategy, in which they declared themselves “descolocados” [disconcerted].
His refusal is mainly related to the control model that the State wants to impose on the projects.
The announcement of the lithium strategy came just after the relationship between the Government and businessmen was going through one of its best moments, after the approval of the Los Bronces mining project and the law that reduces weekly working hours from 45 to 40 hours.
Ellen Lenny-Pessagno, director of Albemarle in Chile, during an interview on February 5, 2020. CARLOS VERA (Reuters)
The lithium proposal, however, again strained the fragile link between the two worlds.
Companies involved in the industry reacted cautiously, even though their shares tumbled on Friday after the announcement.
SQM's shares fell 15% on the Santiago Stock Exchange and Albemarle's 10% on the US stock market.
Through a statement, SQM said that it was analyzing the proposal and indicated that it hopes to "be part of this dialogue and conversation that is now beginning."
Meanwhile, Albemarle said that they will continue "collaborating with the Government of Chile on the proposal."