FILE PHOTO: A view of a brine pool of a lithium mine on the Atacama salt flat in the Atacama desert, Chile, August 16, 2018. REUTERS/Ivan Alvarado/File Photo
SANTIAGO: The Chilean government’s announcement of a new lithium model is giving the nation’s biggest producer some hard choices and its shareholders a reason to sell.
SQM, the fertiliser-turned-lithium giant, runs the planet’s biggest and most profitable brine operation in Chile’s northern desert under a contract that expires in 2030.
Under President Gabriel Boric’s new lithium-development policy, SQM has two choices – keep full control of the operation for the rest of the current contract and risk losing it when it ends, or let the state take a majority stake with the understanding that it could keep operating longer.
Complicating the decision further is the fact that Chile will have two changes of government before that date, which may bring with it a new lithium policy.
“I would look for SQM to strike an agreement fairly quickly,” said Joe Lowry, an industry consultant.
To be sure, the only other producer in Chile, Albemarle Corp, is facing similar choices.
But the US firm has about 20 years left on its contract and is far less reliant than SQM on a single, albeit massive, salt flat in Chile.
SQM said it’s analysing the government’s plan. There’s plenty still up in the air. For example, it’s unclear how the state would finance its share of existing operations and investments and what role it would play in decision-making. — Bloomberg
