Chile's State-Owned Mining Company Establishes Alliance for Lithium Extraction

Chile's state-owned mining behemoth, Codelco, renowned as the world's leading copper producer, made a groundbreaking announcement on Wednesday regarding an unprecedented partnership with the private mining giant SQM. The alliance, set to span from 2025 to 2060, is poised to significantly elevate lithium extraction levels in the Atacama Desert, nearly doubling the output. This strategic collaboration aims to extract an impressive 300,000 tons of lithium annually, a critical component in the production of electric vehicle batteries, as well as being essential in the manufacturing of cell phones and various other electronic devices.

In contrast, SQM's lithium extraction in the Atacama Desert for the year 2022 amounted to 168,000 tons. The magnitude of this partnership has been labelled as unparalleled in the history of the Chilean mining industry, symbolizing a substantial stride towards achieving equitable and sustainable development. Chilean President Gabriel Boric, expressing his enthusiasm, described this venture as a pivotal milestone in a televised address to the nation.

Codelco, a significant contributor responsible for approximately eight percent of the world's copper supply, has joined forces with SQM, a major player in the lithium exploration sector. The Atacama Desert, home to extensive lithium reserves, positions Chile as a key player in the global green revolution. Lithium, a soft metal with diverse applications, is in high demand, primarily driven by the global shift towards cleaner energy sources to combat the adverse effects of climate change.

Chile, recognizing its pivotal role in the green revolution, envisions a bright future for itself in fostering sustainable mining practices. The Atacama Desert, holding one of the largest lithium reserves globally, has become a focal point for meeting the escalating demand for this critical resource. This demand surge is closely tied to the global endeavor to transition away from fossil fuels and embrace more sustainable energy solutions.

In alignment with this strategic vision, Chilean President Gabriel Boric's administration unveiled an ambitious "national lithium strategy" in April. This comprehensive strategy aims to establish state control over the entire production cycle of lithium, a mineral in which Chile stands as the world's second-largest producer. The initiative underscores Chile's commitment to shaping its destiny as a key player in the lithium market, aligning with the broader objectives of the global green agenda.

Lithium, constituting a substantial portion of Chile's export portfolio, accounted for 8.2 percent of the country's total exports in 2022. Key destinations for Chilean lithium exports include major players such as China, South Korea, and Japan. This international demand underscores the critical role that Chile plays in meeting the burgeoning need for lithium, an indispensable element in the manufacturing of batteries that power the world's growing fleet of electric vehicles and an array of electronic devices.