1 Current conditions for lithium mining in Chile
The Salar de Atacama is the deposit with the best conditions for lithium mining in the world (Figure 1). The concentration here is 1,500 ppm. Other advantages are the geographical location at only 2,300 m NHN, access to roads and electricity, and proximity to international ports. These mining conditions for lithium are unique in the world.
Chile has 45 salt lakes and 18 lagoons with lithium deposits, of which only 23 have been explored in detail so far. In other words, the potential for lithium production in Chile is far from exhausted. So far, only two private companies are producing lithium in Chile: the local company SQM and Albemarle from the USA. Both operate in the Salar de Atacama. In 2022, SQM held a market share of 20 % in the production of lithium, Albemarle contributed 16 % and both together paid almost 5.7 bn US$ in taxes to the Chilean state in 2022.
The fact that no other companies have mined lithium in Chile so far is mainly due to Decree 2.886 of 1979, according to which lithium, uranium and thorium are minerals of national interest due to their potential use in the nuclear sector and therefore cannot be concessioned. A special state permit is required for their extraction. Other minerals, on the other hand, are only subject to standard regulation and depend on the relevant donors and the approval of mandatory environmental impact studies.
Against this background, only the state or state-owned companies can mine lithium in Chile. Private companies need a specific permit for this. The Ministry of Mines is responsible for granting these “Contratos Especiales de Operación de Litio (CEOL)” on the basis of a presidential decree. Furthermore, additional administrative concessions are required, apart from the approval of the Chilean Nuclear Energy Commission (Comisión Chilena de Energía Nuclear CChEN).
Besides the Ministry of Mines, which awards the CEOL for mining, the Chilean economic development agency Corfo (Corporación de Fomento de la Producción) as the only concession holder of lithium mining sites so far, and the Chilean copper commission Cochilco (Comisión Chilena del Cobre) are important actors for companies that want to mine lithium in Chile. Cochilco, for example, is evaluating the award of the special lithium contracts CEOL. The Chilean Nuclear Energy Commission authorises the quota for the commercialisation of lithium. Furthermore, the geographic service Sernageomin and the water authority DGA play a role.
The fact that lithium is mined at all in the Salar de Atacama goes back to the concession Corfo had already acquired in the Salar de Atacama before 1979, before the law came into force. Within the framework of this concession, Corfo was able to conclude corresponding lease agreements with the two current lithium producers SQM and Albemarle, which also contain pumping quotas and mining quantities.
SQM’s contract runs until 2030, Albemarle’s until 2043. If both contracts expire and no new agreements are reached with Corfo, the companies would have to leave the Salar de Atacama.
Table 1 shows the world’s most important lithium producers, Table 2 the countries with the largest lithium reserves.
2 Chile’s national lithium strategy 2023
On 20th April 2023, in an address to the Chilean people, Chilean President Gabriel Boric presented the new national lithium strategy, which had already been announced for 2022, had been postponed several times and was therefore awaited with great interest. The basic framework, i.e. the creation of a national lithium company and the possibility of public-private partnerships for specific projects, had already been made public through various channels in the weeks before, as had a stronger role for the two state-owned companies Codelco (Corporación Nacional del Cobre de Chile), the world’s largest copper producer, and the state-owned mining company Enami (Empresa Nacional de Minería).
2.1 One strategy – six pillars:
Chile’s new lithium strategy rests on the following six pillars:
- Involvement of the state in all stages and cycles of the industry through the creation of a State Lithium Enterprise and a Committee Corfo for Lithium and Salt Lakes:
- State Lithium Enterprise: To ensure the development of exploration, mining and value addition projects through collaboration with private companies. The company is also expected to promote technology development in all areas of the value chain.
- Committee for Lithium and Salt Lakes under the leadership of the Ministry of Energy: The committee is to be responsible for promoting productive change and the development of scientific-technological and industrial development strategies. The aim is to develop activities upstream as well as downstream of the lithium cycle.
- Capacity/know-how building through a public institute for lithium and new technologies:
- New technologies for direct lithium extraction with re-injection of brine instead of its evaporation will be promoted. The goals are to reduce the impact on the ecosystems of the salt lakes and to improve water management.
- Study the other salt lakes to assess lithium concentration and investigate the conditions for possible responsible and sustainable lithium extraction.
- Public-private partnerships for exploration, development and growth of the industry, with the state retaining control over productive decisions.
- Political and social sustainability through the involvement of territories and communities: Dialogue with and participation of different stakeholders such as representatives of local communities and indigenous groups, regional government, academia, business, civil society, central government and other public institutions.
- Environmental sustainability through the establishment of an administrative network of protected salt lakes and ensuring the use of environmentally friendly technologies.
- Modernising the institutional framework of the industry in line with the country’s challenges and goals: Support the development and growth of the lithium industry, mitigate environmental impacts on salt lakes and ensure stability for existing and new organisations.
2.2 Overview of concrete measures and timings.
The following concrete measures are envisaged:
- law to create a national lithium company (date still open);
- creation of a public institute for lithium and new technologies (second half of 2023);
- strategy to start state productive activities in the Salar de Atacama. The strategy is still to be implemented in 2023;
- mechanism for exploration and cadastre creation in salt lakes other than the Salar de Atacama;
- start of national participatory process with municipalities, communities (date still open);
- creation of a CORFO committee for the productive development of lithium and the salars (third quarter 2023);
- start of the inclusion process in the Extractive Industries Transparency Initiative (EITI) (first half of 2023).
2.3 Public-private cooperation
Public-private cooperation is considered the centrepiece of the strategy. It implies both a stronger role for the state and the participation of private parties. The private sector is expected to provide know-how, capital and the development of new technologies to increase production and add value.
In addition, the aim is to create more competition – not least by diversifying the players. In concrete terms, this means increasing the number of players in the Salar de Atacama from the current two (Figure 2) and creating a cadastre of the other salars in order to carry out public-private exploration there.
The involvement of private participation in projects in salars that have been declared as “strategically important” will take place in a minority shareholding. This does not necessarily apply for other projects in salars that have not been declared as strategically important. So far, there is no information on which projects are considered strategically important.
2.4 Codelco’s role in Salar de Atacama
Currently, Corfo manages the lithium reserves. As part of the national lithium strategy, the president instructed Corfo to commission Codelco to work out the best ways to involve the Chilean state in lithium extraction in the Salar de Atacama from now on.
Codelco will be the state representative vis-à-vis Albemarle and SQM to obtain state participation even before the current contracts expire. Negotiations with SQM have already started. The contracts with SQM and Albemarle will be fully respected until they expire in 2030 (SQM) and 2043 (Albemarle).
The Chilean state will fully comply with the provisions of the existing contracts until the end of the contract. This means that any expected state participation in the Salar de Atacama will be the result of an agreement with those who currently hold the rights to extract the lithium.
References / Quellenverzeichnis
References / Quellenverzeichnis
“Presentes por un mejor Futuro: Estrategia Nacional de Litio. Litio, una Oportunidad Histórica para un Chile Desarrollado”.
GTAI: Chile bietet Einstiegschancen ins Lithiumgeschäft. Online abrufbar: https://www.gtai.de/de/trade/chile/branchen/chile-bietet-einstiegschancen-ins-lithiumgeschaeft-1004030
GTAI: Lithium aus Chile hat den kleineren ökologischen Fußabdruck.