Chile Drafts Lithium Auction Regulations to Lure New Producers
(Bloomberg) -- The country holding the largest reserves of lithium is drafting regulations to auction mining rights for the mineral used in rechargeable batteries, in a move that would allow more players to enter the market.
The new rules probably will be aPProved after March, when President-elect Sebastian Pinera is in office, according to Eduardo Bitran, who heads government development agency Corfo.
In September, Mining Minister Aurora Williams said the commission working on the new lithium code would offer guidance by the end of 2017.
Production of lithium in Chile has been restricted since 1979, when the government declared the commodity “strategic” because it was thought to be a key element in nuclear processes.
The government hasn’t awarded a lithium license in more than two decades and Albemarle Corp. and Soc. Quimica & Minera de Chile SA are the only companies producing in the country. As global demand for lithium soars, other small companies have acquired rights or set up offices in Chile, waiting for the government to issue new rules.
"Companies will have to express their interest in a lithium license and then the government will see if there are others interested," Bitran said in an interview in Santiago Monday.
"We’ll go through an auction process and the best bidder will be awarded the license."
Companies that already have rights to other minerals will be given priority for lithium licenses in those areas, he said. Bidders would still have to obtain a separate license from the Chilean Nuclear Energy Commission, or CCHEN by its Spanish initials, which oversees lithium exports.
Albemarle and SQM’s operations in the Atacama salt flat have the potential to produce 300,000 metric tons of lithium carbonate a year by 2025, according to Bitran. Atacama’s output alone would cover half of the world’s forecast demand, while all of the other salt flats in Chile combined could produce about 100,000 tons a year, he said.
Last week, Corfo and SQM ended a years-long contractual dispute by agreeing to new terms for production at Atacama. The arrangement also clears the way for SQM to partner with state-owned copper producer Codelco in the Maricunga salt flat, where both companies have tenements.
"The deal includes a clause where SQM promises to make its best efforts to negotiate a joint venture with Codelco in Maricunga," Bitran said. "We don’t see how anyone wanting to operate in Maricunga could do it without SQM’s property because it sits right at the center of the salt flat."
Codelco was expected to announce a partner to help develop lithium in Maricunga before the end of last year, but it delayed its decision in November. The company probably will analyze the possibility of setting up a joint venture with SQM when Pinera’s government names the new Codelco chairman, Bitran said