LITHIUM FEVER IN THE WORLD: CHILE MUST PARLAY ITS ADVANTAGES

Chile is rich in lithium, which is a state mineral. It is known that, in our country, it is not concessional. Any legal or administrative act concerning lithium must be approved by the Chilean Commission of Nuclear Energy (CCHEN), as established by Decree 2.889 of 1979.

The great advantages of this resource, and the multiple possibilities Chile has to take advantage of the richness of this promising mineral were some of the topics presented in the last Annual Meeting of the Center for Copper and Mining Studies (CESCO), where one of its directors, the academician Jose Joaquin Jara, explained the upcoming outlook to parlay this very promising resource, now more than ever after the boom of electromobility, among other businesses.

1. If lithium is a state, non-concessional mineral, why are there companies exploring and raising capital to develop lithium projects in Chile?

In my opinion, there are two reasons that can explain this situation. Firstly, because there are high expectations that the global demand for lithium will grow strongly in the coming years, and Chile has a large number of salt flats (apart from the Atacama Salt Flat) that might have the potential to develop lithium mining projects that could be competitive in this market. I say “could” because, for many of them, there aren’t even basic studies for their evaluation. Secondly, because even if their regulations are clear when stating that lithium is a non-concessional mineral and that any legal and/or administrative act must be approved by the CCHEN, there is a chance of establishing mining concessions at salt flats (including all minerals contained in brines and salt crusts, except for lithium) with a lithium potential; this means an overlapping of rights between the rights of the mining concessionaire and the state’s rights over lithium. In short, this generates a gap in the regulation that, in my view, the Chilean State should clarify.  

2. Is it possible to talk of a “lithium fever”?

Indeed, we can talk of a “lithium fever” in a global scale. It is expected that this mineral increases its demand by three or four times in the next ten years, and by six or seven times in the next twenty years. In such a scenario, great expectation comes up towards getting sources for this mineral.

3. Are there real opportunities for developing lithium mining in Chile, almost as competitive as copper mining?

In terms of competitiveness in the industry, lithium mining in Chile is, and may continue to be more competitive (if compared to other producer countries) than the Chilean industry of copper. This is due to the production cost advantages of the Atacama Salt Flat. However, if we see this as a significant sector’s priority for the economy of the country in the next twenty years, we don’t see a sector capturing the relevance of copper, currently-and historically. If all the potential of lithium production for the country is developed and prices remain at the current levels, Chilean lithium exports would reach values close to USD$ 3,000 million per year, 10% of what is currently obtained on copper exports.  

4. In your opinion, what are the main difficulties associated with the exploration and exploitation of this mineral?

I believe the main issue is the lack of a regulatory definition for this industry. As I said before, there is a regulation gap that prevents the state and the private sector from taking action towards the development of this industry. From my point of view, it is necessary for the country to set out quickly the role the state is to assume in this market and the tools to be used for its development.

5. Is it a pending challenge for Chile to fill this gap? What are its advantages compared to other producer countries?  

It is a challenge in the sense that there are several technical, financial and regulatory issues that must be addressed in order to develop this industry, and also because there are mixed visions about essence of the way to resolve these issues. In addition, there is an urgency of moving forward, as the market worldwide is developing fast and the opportunity we have as a country may be lost (or reduced). Nevertheless, it also represents a great opportunity. Chile has advantages in this market related to the quantity and quality of its mineral resources and their geography. In my judgement, the country must parlay these advantages to enter the new industrial revolution the world is experiencing, related to green economy, automation and widespread availability/use of information.

 

By Jose Joaquin Jara.