SQM announces memorandum of understanding with Codelco

The MoU is a framework agreement upon which both companies hope to build a partnership to produce high-quality lithium products in the Salar de Atacama, in a sustainable manner and in harmony with the communities. In order to achieve this, both parties have made a commitment that the new operating company that will be established (NewCo) will make the investments in new technologies that are necessary to make high productive yields compatible with the trend towards hydrologic balance in the Salar de Atacama basin.

The MoU highlights the entry of Codelco at the beginning of 2025 into the ownership of the NewCo, the company that will be responsible for the production of lithium carbonate and lithium hydroxide on the properties that SQM currently leases from the Chilean Production Development Company (Corfo) in the Salar de Atacama. Additionally, NewCo will be responsible for the execution of the different projects and the sales of lithium worldwide.

This partnership will permit, among other positive aspects, an efficient transition between the current SQM lease contracts with Corfo, which expire in 2030, and the lease contracts that Codelco has from 2031 to 2060. This will help avoid the interruption of production during the first two years of the Codelco lease contracts which will commence in 2031, and could have a positive effect on maintaining global lithium market participation. It will provide income to Corfo, as well as contributions to communities and regional governments. Added to the above are the significant tax payments made as a result of the profits derived from the production and sales of lithium products. It should be noted that the lithium production operation contributes to the Chilean State (considering lease payments to Corfo and tax payments to the country), close to 70% of the operational profit of the business. These benefits are in addition to the thousands of high-quality jobs, the associated projects and investments, and the positive effects in the Antofagasta region.

This MoU constitutes a significant milestone in the process of discussions between both companies that began on 31 May 2023, and adds to the recent agreement reached on 14 December 2023, with the Council of Atacameno Peoples, to initiate a dialogue process and to establish a negotiation working group to discuss matters of sustainability, participation, transparency, and access to information.

Both companies have committed to taking the necessary steps to negotiate and sign, based on the MoU, the definitive agreements that will make this partnership effective.

Ricardo Ramos, CEO of SQM, commented, “I believe that with Codelco we are achieving the objectives that we had set forth at the beginning of the negotiation process to create a positive partnership for Chile, for the Antofagasta region, for the communities and for both companies. We are moving forward. There is a significant amount of work which needs to be done on this great project and we are deeply committed to making it happen.”

He added, “This is a significant milestone in public-private partnerships in Chile. Codelco is the most important company in Chile and we are proud to be able to work together with them. We believe that the successful development of the Salar Futuro Project will make the Salar de Atacama operations the most sustainable lithium operation in the world. Being able to achieve this in harmony with the well¬ being of neighboring communities, supports our long-term vision for the mining industry.”

Read the article online at: https://www.globalminingreview.com/mining/04012024/sqm-announces-memorandum-of-understanding-with-codelco/