Chile brings lithium under majority state ownership
- Ben Geman, author of Axios Generate
Pools of brine containing lithium carbonate and mounds of salt by-products stretch across a lithium mine in the Atacama Desert. Photo: Lucas Aguayo Araos/Anadolu Agency via Getty Images.
Chilean President Gabriel Boric's move to bring lithium extraction under state control is a major step in efforts by nations rich in energy transition resources to strengthen their hands, Ben writes.
Why it matters: Chile is the world's second-largest lithium producer, supplying a fourth of the global supplies of the metal, which is a critical component of EV batteries.
🏃🏽♀️ Catch up fast: Late last week, the left-wing president announced a "National Lithium Strategy," calling it a "fundamental step to link the economic development of Chile with the change towards a global green economy."
- One key part: The state would reportedly have a majority stake in new contracts.
- What will happen to existing contracts of the two major producers active there — SQM and Albemarle — is less certain.
- The FT notes they would "negotiate an unspecified state participation in their existing concessions, which run to 2030 and 2043 respectively."
What they're saying: "[I]t’s a quasi-nationalization in that the playing field will now be leveled in favor of the state,” Nicolás Saldías of the Economist Intelligence Unit tells AP.
🖼️ The big picture: It's part of a wider trend of countries looking to exert more control of materials in high (and growing) demand as the world shifts to more climate-friendly tech.
- For instance, Mexico nationalized lithium mining last year, while Reuters notes that Indonesia in 2020 banned exports of nickel ore as it looks to develop the full supply chain.
The bottom line, via Axios' Jael Holzman, an expert on resource geopolitics:
"Chile’s move demonstrates how the energy transition could invert colonialist resource market power dynamics, as the demand for minerals like lithium empowers nations in the Global South."
