Chile’s left-leaning government vowed to take a pragmatic approach to opening up new areas for lithium mining as it looks to lure investment under its public-private-participation model.
(Bloomberg) — Chile’s left-leaning government vowed to take a pragmatic approach to opening up new areas for lithium mining as it looks to lure investment under its public-private-participation model.
Authorities understand that “the numbers should make sense” for the private sector, Economy Minister Nicolas Grau said Thursday on a call with more than 400 lithium industry representatives from 30 countries.
Read More: Why Chile’s New Approach to Lithium Matters Globally: QuickTake
Work to identify new extraction areas is well advanced as would-be bidders jostle to tap the world’s biggest reserves of the metal that’s a key component in electric-vehicle batteries. Under President Gabriel Boric’s new public-private model, the state will take a controlling stake in operations considered strategically significant, while allowing private firms to retain control of projects in non-strategic areas.
The government will be flexible when defining those categories, Grau said, acknowledging that some salt flats are too small for the state to have a major role.
“Our strategy is flexible, such that we can attract the private sector to participate,” he said.
His comments may ease lingering concerns that the new approach is a quasi-nationalization.
Read More: More Than 50 Firms Want In on New Lithium-Mining Model in Chile
The government has three categories of contracts. In the Salar de Atacama, the only salt flat currently being exploited, state copper behemoth Codelco is negotiating a new arrangement with SQM. Separately, Codelco and another state firm, Enami, will receive contracts in about five salt flats, for which they’ll have to find private partners. Then other groups of smaller salt flats will be open for tender to the private sector in mid 2024.
The government is “close” to specifying which salt flats will be protected and which will be available for exploitation, Grau said. Authorities will restrict lithium exploration and production on 30% of the surface area of salt flats in the country’s northern desert. That will still leave more than 10 open for development under new contracts, he said on the call.
The minister sees a “high” probability that Chile will issue at least one new contract in the next 12 months, with the government hopeful of having five new projects underway by 2025.
The government is looking to increase production after Chile saw its share of the global market decline, while shifting to more sustainable extraction methods.
It’s also looking to encourage downstream investments. Companies able to add value will have an advantage under the new model, the minister said. New contracts will also offer something similar to the current requirement to offer 25% of production for local use at preferential prices, he said.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.