Lithium Business: Chile’s Plan For State Control

The Chilean government’s newly announced plan to have the state take a majority stake in the lithium industry disconcerted business leaders, though analysts cautioned that the proposal appears to try to strike a middle ground between competing interests.

President Gabriel Boric announced in a national broadcast Thursday night that private companies will have to partner with the government in exploiting Chile’s lithium, a metal used to make rechargeable batteries.

Chile’s President Gabriel Boric speaks during an event to present the National Lithium Strategy in Antofagasta, Chile, on April 21, 2023.

Boric said the state would take a controlling interest in each partnership, leading some to call it a nationalization of the industry, while others disagreed.

Chile is the second largest producer of lithium and holds the world’s third largest reserves of the metal.

Demand for lithium is expected to soar amid the transition to renewable energy around the world and the growth in electric vehicles that are powered by lithium batteries.

The South American country has recently been losing ground to others in the race to exploit the metal so there was much anticipation over what Boric, a leftist, would announce as the country’s strategy for the industry.

“There were no great surprises, which doesn’t mean that it isn’t a very important change in the model,” said Mariano Machado, principal analyst for the Americas at Verisk Maplecroft, a global risk intelligence firm.

Two companies currently mine lithium in Chile, Albemarle Corp. of the United States and local company SQM with concessions set to expire in 2043 and 2030, respectively.

Shares in the two companies plunged Friday following Boric’s announcement.

Creation of the new company would require approval from Congress, which has already shot down several of Boric’s key initiatives.