The New Lithium Partnership Between Codelco and SQM

The New Lithium Partnership Between Codelco and SQM

Chile’s state-owned copper giant, Codelco, has recently announced a groundbreaking deal with SQM, a private mining company, to significantly increase the extraction of lithium. This initiative is crucial for the global transition towards cleaner energy sources. The partnership aims to establish a public-private alliance dedicated to refining lithium production in the Salar de Atacama region from 2025 to 2060. The Salar de Atacama, known for its vast lithium deposits, is situated in the Atacama Desert and is a key player in the “lithium triangle” along with Argentina and Bolivia.

The demand for lithium has been steadily rising in recent years, mainly fueled by the increasing shift towards electric vehicles and renewable energy technologies. Lithium is a critical component in electric car batteries, making it an indispensable resource in the quest to reduce reliance on fossil fuels and combat climate change. With this partnership, Codelco and SQM plan to extract an additional 300,000 tons of lithium from 2025 to 2030, with a targeted production rate of 280,000-300,000 tons annually from 2031 to 2060. In 2023, SQM alone produced 169,000 tons of lithium, underscoring the immense potential of this collaboration.

Following the formation of this partnership, Chilean President Gabriel Boric, who assumed office with a vision for a national lithium company akin to Codelco, has taken strides towards solidifying the country’s position as a key player in the global lithium market. Under the terms of the agreement, Codelco will hold a 50 percent stake, plus one share, in the new venture. The Chilean government will benefit significantly from the partnership, receiving approximately 70 percent of the operating margin generated between 2025 and 2030, and 85 percent from 2031 onwards. This move underscores Chile’s commitment to maximizing the economic benefits of its lithium reserves while maintaining a sustainable approach to resource management.

While Chile was once the world’s leading lithium producer, accounting for 37 percent of global output until 2016, the landscape has shifted in recent years. In 2022, Australia surpassed Chile to claim the top spot, producing 243,100 tons of lithium, representing 34 percent of the worldwide total. However, with the establishment of this new partnership between Codelco and SQM, Chile is poised to regain its competitive edge in the lithium market and solidify its status as a significant player in the global renewable energy revolution.


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