President Gabriel Boric’s government has revealed six new brine deposits for lithium extraction in Chile. This announcement marks a significant step in the country’s efforts to expand its lithium industry.
Chile aims to capitalize on its vast lithium reserves, which rank among the world’s largest. The government has identified these new areas for potential private sector development.
This move is part of Chile’s strategy to increase its lithium production capacity. The country seeks to double its output over the next decade, despite current global market saturation.
These newly identified deposits will undergo consultations with local indigenous communities before any mining activities can commence.
Following this process, companies will have the opportunity to bid for contracts. Firms already holding exploration permits for at least 80% of an area can apply for contracts directly.
Mining Minister Aurora Williams and Economy Minister Nicolás Grau presented these details in a recent briefing. The areas were selected based partly on expressions of interest from potential bidders.
Chile remains optimistic about long-term investor interest, believing in the strength of electric vehicle demand despite recent price fluctuations.
Currently, only two companies produce lithium in Chile: SQM SA and Albemarle Corp., operating in a single salt flat. Boric’s public-private model aims to diversify this landscape.
The state will take a majority stake in strategically important operations, while private companies will maintain control in non-strategic zones.
The first group of non-strategic zones includes Coipasa, Ollagüe, Ascotán, Piedra Parada, Agua Amarga, and Laguna Verde.
Additional zones will be announced in the coming quarter. This phased approach allows for careful management of resource development.
Background
Chile dominates the global lithium market with significant reserves and production capacity. The country holds 36% of global lithium reserves, estimated at 9.3 million metric tons.
In 2023, Chile produced 44,000 metric tons of lithium, representing 24% of global production. Despite recent export volume increases, the value of Chile’s lithium exports has decreased due to lower prices.
In early 2024, exports rose 24% in volume but fell 37% in value. China remains Chile’s largest market for lithium exports. Two companies, Albemarle and SQM, control most of Chile’s lithium production.
The mining sector, including lithium, plays a crucial role in Chile’s economy, contributing 13.6% to GDP and accounting for 58% of total exports in 2022.
These figures underscore Chile’s pivotal position in the global lithium industry and its economic significance to the country.