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Chile launches call to boost lithium production and attract new operators

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Global Mining Review,

Chile’s call seeks to award special operating contracts to explore and produce 400 000 t of marketable metallic lithium, divided into five quotas of 80 000 t each. There will be a term of seven years to carry out the geological exploration, studies and development of the project, extendable for another two, and another 20 years for production.

The state will capture a royalty for the allocation of the quotas in addition to a variable payment during the production stage.

In order to meet the increase in global demand for lithium and the growth that is projected in the future, within the framework of the fight against climate change, the Ministry of Mining announced a national and international public call for the subscription of special operating contracts that develop the exploration and production of lithium deposits in the country.

Like copper, lithium is considered a key mineral for the world's energy transition and Chile has the largest reserves of this mineral, with a total of 9.2 million t, according to the latest report from the United States Geological Survey (USGS), released January 2020.

In recent years, the development of electromobility, the increased consumption of clean energy and new technologies associated with lithium, have strongly boosted the demand for this mineral. For example, a laptop uses 30 g of lithium carbonate, an electric bicycle requires 300 g, an electric car contains more than 20 kg and a bus with the same characteristics needs more than 200 kg.

Thus, projections suggest that world demand will quadruple by 2030, reaching 1.8 million t of lithium carbonate, while the available supply would be approximately 1.5 million t. Chile, which until 2012 was the world's leading lithium producer, was overtaken by Australia and it is expected that by the end of this decade, China will displace the country to third place.

In Chile in 1979, lithium was declared of national interest and became non-concessional. Since then, only the State of Chile can manage lithium production, for which there are four mechanisms: doing it on its own; through a special lithium operation contract (CEOL); through its state companies, or through Administrative Concessions. This tender maintains the status of lithium as a strategic mineral.

The national and international call announced by the government seeks, through a public, competitive and transparent process, to tender and award CEOLs by quotas to produce a total of 400 000 t of marketable metallic lithium, divided into five quotas 80 000 t each, without a specific geographic location.

The awards will be for a period of seven years – extendable for another two years – to carry out the geological exploration, studies and development of the project, to which another 20 years of production will be added. The fees will be associated with a marketing authorisation from the Chilean Nuclear Energy Commission (CCCHEN).

With this, the state seeks to facilitate the entry of national and/or foreign companies, promoting production and supporting the development of new technologies that enable the energy transition and the fight against global warming, generating in turn benefits for the state. This initiative complements the CEOL already granted to Codelco in the Salar de Maricunga, and the current production of private companies in the Salar de Atacama through the lease of concessions from CORFO.

This initiative is aligned with the objectives set out in the National Mining Policy 2050, presented August 2020. Indeed, one of the goals of this document is to increase production to 450 000 tpy of lithium carbonate by 2030.

The granting of the CEOL is only a first step, since the companies will have to look for the place to develop their projects, define the technologies, comply with all the applicable regulatory and environmental requirements demanded by the environmental institutions, and generate the favourable environment through the relationship with the communities. The companies must make an economic offer to obtain the quota, in addition to paying a variable amount during the production phase.

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