Chilean Legislators Aim to Expedite the Process of Lithium Extraction

Chile's lower house of Congress has passed a resolution urging President Gabriel Boric to expedite legal and administrative procedures related to lithium extraction. The primary objective is to use lithium royalties to finance an increase in the guaranteed minimum pension (PGU) using the current lithium revenue generated by local company SQM and U.S.-based Albemarle in the Salar de Atacama. Additionally, Quiborax and Blanco may soon join as contributors.

This move comes after the lower house rejected a tax reform in March, and lawmakers now aim to bolster the PGU to 250,000 pesos (approximately US$283) per month per eligible person. Furthermore, lithium carbonate exports amounted to US$7.76 billion in 2022, representing 8% of total exports and standing as the second-largest mining export after copper.

Roberto Alfaro, the CEO of Lithiuming, an engineering and technology company based in Antofagasta, explained that the lower house's initiative could accelerate the lithium strategy's promotion. He also emphasized the importance of coordinating efforts among state miner Codelco, Enami, and the mining minister to facilitate swift progress. Discussions to update and extend operations under the national strategy with SQM and Albemarle, whose contracts with the state end in 2030 and 2043, respectively, are ongoing.

SQM is currently executing a US$1.4 billion expansion plan to boost lithium production capacity to 210,000 tons per year, including 100,000 tons per year of lithium hydroxide. In parallel, Albemarle is advancing phase 3 of an expansion at its carbonate plant to increase capacity to 88,000 tons per year. Last year, SQM reported sales of 158,000 tons of lithium carbonate, while Albemarle reported 53,000 tons.

Meanwhile, Quiborax, the world's third-largest boric acid producer, has a lithium project in the permitting phase. Situated in the Arica y Parinacota region, this project could contribute to public revenues if it proceeds. Notably, it's expected to have a low environmental impact, as lithium will be extracted from mining byproducts.

Codelco's acquisition of Blanco through a US$244 million agreement with Australia's Lithium Power (LP) enhances the potential for public contributions. Blanco's proximity to Codelco's properties in the Salar de Maricunga, Atacama region, offers opportunities for synergies. Environmental impact studies approved in 2020 predict production levels of 20,000 tons per year of lithium carbonate and 58,000 tons per year of potassium chloride over a 20-year operation.

The Chilean government's commitment to streamlining lithium extraction processes reflects the country's recognition of the significance of lithium in the global economy and its potential to contribute to public revenues and the welfare of its citizens. Accelerating this sector's development is a strategic move that could position Chile as a key player in the lithium market while addressing social and economic needs.