Chile’s President, Gabriel Boric, announced on Thursday that the country will nationalize its lithium industry and create a state-owned company to produce the rare metal, which is a key component of electric vehicle batteries. The nationalization plan will require approval in congress in Santiago, and it is likely to be debated in the second half of the year. Boric stated that the state will participate in the entire production cycle and create a National Lithium Company. He also called for the development of value-added lithium products in Chile.
Boric emphasized that the nationalization of lithium production would entail stricter environmental rules. The mining of lithium in Chile is a water-intensive process, and future mining projects will move ahead after consultation with local communities to minimize water consumption for the mining process. Boric acknowledged that Chile holds the world’s largest lithium reserves and is the world’s second-largest producer of lithium. The South American country is the latest among a number of countries that have taken steps to increase control over mineral resources. Mexico, for instance, nationalized its lithium industry last year.
Two lithium miners, Chile’s SQM and the US company Albemarle, currently mine the country’s lithium reserves, and their contracts run until 2030 and 2043, respectively. Boric stated that the duration of these contracts would be respected. Once the lithium plan is passed through congress, the two miners will have to negotiate an unspecified state participation in their ongoing mining operations.
In a television address, Boric mentioned President Salvador Allende’s 1971 nationalization of copper and stated that Chile’s lithium reserves are not just minerals but also people, communities, water in the desert, and the home of cultures thousands of years old. The President believes that nationalizing the lithium industry is the best chance for Chile to transition to a sustainable and developed economy.
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