Chile to nationalise its Lithium Industry
Chile’s President Gabriel Boric says he would nationalise the country’s lithium industry to boost its economy and protect its environment.
Chile is the world’s second largest producer of the metal essential in electric vehicle batteries.
The move in the country with the world’s largest lithium reserves would in time transfer control of Chile’s vast lithium operations from industry giants SQM and Albemarle to a separate state-owned company.
The move poses a fresh challenge to electric vehicle (EV) manufacturers scrambling to secure battery materials, as more countries look to protect their natural resources.
Mexico nationalised its lithium deposits last year, and Indonesia banned exports of nickel ore, a key battery material, in 2020.
“This is the best chance we have at transitioning to a sustainable and developed economy. We can’t afford to waste it,” Boric said in an address televised nationwide.
Future lithium contracts would only be issued as public-private partnerships with state control, he said.
The government would not terminate current contracts, but hopes companies would be open to state participation before they expire, he said.
In a reaction, Albemarle said the announcement would have “no material impact on our business” and it would continue talks on investing in further growth and using new technologies in Chile.
SQM was not immediately available for comments.
Meanwhile, South Korean battery maker SK On, which has a long-term supply contract with SQM, said it would monitor the development and respond with a long term view.
However, the announcement by Chile did not trigger a reversal in lithium prices , which have plunged more than 70% from a November peak due to weakening EV demand in China, the world’s biggest auto market.
The most-traded lithium carbonate futures on the Wuxi Stainless Steel Exchange in China fell 3.4% as of 0618 GMT on Friday.
The move is likely to spur a shift in future investment in lithium to other countries including Australia, the world’s biggest producer, according to analysts .
Reuters/Hauwa Abu
