Chile unveils lithium salt flats it plans to lease to private companies

Chile unveiled salt flats that will be opened up to lithium mining as part of a plan to double production of the battery metal over the next decade under a new public-private model.

Two flats — the giant Salar de Atacama where Chile produces all of its lithium currently, as well as Maricunga — were deemed to be of strategic importance, meaning future contracts will be controlled by the state, ministers said Tuesday. At two other areas, state-owned firms will have the flexibility to negotiate terms with private-sector partners. In a separate process, contracts for as many as 26 other areas will be put out to tender.

The announcement of the three different categories sheds a little more light on President Gabriel Boric’s plans to tap the world’s largest reserves of the key ingredient in electric-vehicle batteries. The goal of doubling output in a country that’s already the world’s number two producer would be cheered by the EV supply chain as demand grows in the move away from fossil fuels.

When the leftist leader first unveiled his lithium strategy a year ago, the emphasis was on state firms taking control of partnerships with the private sector in the most prospective areas. Now, the door is open for companies to control projects and even go it alone in areas of lesser importance.

Still, plenty of questions remain, including the funding responsibilities of state companies; the criteria used to select the 26 areas that will be offered to the private sector and others that will be protected from mining; as well as any requirements to adopt more sustainable extraction techniques.

“The devil is in the details here,” said Chris Berry, president of House Mountain Partner, an industry consultant. “There are so many unanswered questions in my mind with respect to Chile’s new lithium strategy.”

Companies will have 60 days beginning in April to request more information on the salt flats open to new contracts. The government expects to see three or four new projects under development by 2026. After a supply glut saw lithium prices plunge last year, authorities are betting that prospective bidders will take a long-term view on the shift away from fossil fuels.

Currently, only US-based Albemarle Corp. and local firm SQM produce lithium in Chile, which has been losing market share due to strict output quotas.

While Albemarle’s contract runs through 2043, SQM’s expires in 2030. As a result, the Santiago-based firm has agreed in principle to hand over a majority stake in its brine assets to state-owned Codelco in exchange for extending operations for three decades.

As a major producer of lithium and copper, Chile is at the forefront of the global transition to clean energy. But the government’s engaged in a delicate dance, seeking a bigger role for the state while attempting to attract more private capital, defend the environment and move further down the value chain — all at a time of increased tensions between its top trading partners, China and the United States.