The lithium bid, which will be awarded less than two months before the end of the mandate of Sebastián Piñera in Chile, the world’s second largest producer of the metal, raised suspicions in the opposition and in the team of the president-elect, the leftist Gabriel Boric.
The auction aims at the allocation of 400,000 tons of metallic lithium or 2,129,200 tons of Lithium Carbonate Equivalent (LME), the sector’s reference unit, divided into five quotas, with a period of seven years to carry out the geological exploration, studies and project development.
The contract provides for another 20 years for the exploration of this light metal, considered essential for the development of electric vehicles.
“We have two options: either we leave the lithium underground or we use the lithium for the benefit of all Chileans,” President Piñera told the press this Friday (7th) to justify the bidding process launched in October.
“After seeing that lithium production in Chile was stagnant (…) and that countries like Argentina and Bolivia were threatening to overtake Chile, we decided to launch a strategic plan for the use of lithium”, added the president.
According to the Ministry of Mines, until 2016 Chile was the world’s largest producer of lithium, with 37% of the market, but today it ranks second – behind Australia – with 32%. If the country does not increase its production, by 2030 its share will drop to 17%.
Due to its use in the manufacture of batteries for electric and electronic cars, global demand for lithium is expected to grow by 21% in 2030, according to a latest report by the Chilean Copper Commission (Cochilco), the Chilean state technical body.
“This increase is based on the projected higher consumption of lithium-ion batteries in the automotive sector. We predict that the electric vehicle segment will go from representing 41% of aggregate lithium consumption in 2020 to 73% in 2030,” explained Cochilco in a report presented this week.
Due to electromobility and demand from China, the price of copper – of which Chile is its main producer in the world, with more than 25% of global supply – reached record prices in 2021.
– “National Lithium Company” –
“What the government of President Piñera is doing is putting the general interest of the Nation at risk,” Raúl Soto, opposition deputy for the Party for Democracy (PPD), told the press after filing a protection appeal to stop the process. , which was rejected this Friday -because it was out of date- by the Santiago Court of Appeals.
On social media, a national demonstration was called for this Friday, under the motto “Recover our resources”.
For President-elect Gabriel Boric, who takes office on March 11, Chile can no longer make the “historic mistake of privatizing resources” such as lithium, as it had already done with copper, which was finally nationalized in 1971 by the government of Chile. Socialist Salvador Allende (1970-1973).
Thanks to this action, the state-owned National Copper Corporation (Codelco) is the world’s largest producer of the metal, whose industry in Chile today also involves the main private mining companies, which together produce just over 25% of the world’s supply.
In his program, Boric, who won the election in the second round with 55.8% of the votes, proposes the creation of a “National Lithium Company” to develop a new national industry, with community leadership and adding value to production.
“What we would like is for this process to stop for a long time,” said Willy Kracht, coordinator of Boric’s Minas Gerais team, who met on Wednesday with Minister Jobet, along with the president-elect’s campaign manager, Dr. Izkia Siches.
However, Kracht acknowledged that the rules are not subject to modification, but that they will seek to establish a “working table” to incorporate certain conditions into the bidding contracts, the award of which should be known on January 14.
– Five companies in dispute –
Five companies, including the largest lithium operators in the world, the Chilean Sociedad Química y Minera de Chile (SQM), which extracts 17% of this metal in the world, and the American Albemarle, which produces 19%, presented economic proposals for this tender of up to 61 million dollars for one of the five quotas.
The bidding does not establish the place of exploitation. According to the government, it corresponds to only 4% of Chile’s proven reserves and, after the result of the bidding process, the projects must be subject to all environmental regulations in force.
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