Chile’s government has launched a tender for local and foreign firms to explore and produce a total of 400,000 metric tons of new lithium resources, amid rising demand for use in electric vehicles. The Ministry of Mining said Wednesday (Oct. 14) it will offer five special operation contracts, each for producing and selling 80,000 metric tons of the battery metal.
Winning companies will get seven years- extendable for another two- to explore and develop projects and twenty years of production while authorities will charge a royalty for the allocation of quotas and variable payments during production.
“The increase in global lithium demand and the challenge to promote new technologies to help fight climate change and transition to cleaner energy represents an opportunity to boost Chile’s lithium industry and strengthen its strategic position, benefiting the country and its people,” the Latin American nation’s Ministry of Mining said in a statement.
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 favorable 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.
Meanwhile, indigenous groups and activists have increasingly raised concerns in recent years about the environmental impact of lithium production in Chile. Using countless litres of precious water, the industry is destabilising one of the most delicate ecosystems on the planet, the locals argue.
According to BP’s Statistical Review of World Energy, Chile, Argentina and Bolivia make up South America’s “lithium triangle”, and together hold more than 75% of the world’s lithium reserves beneath their salt flats. Australia, which holds 18.1% of reserves, surpassed Chile in 2018 to become the largest producer by metric ton.
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, 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 IEA said in a May report that demand for lithium is set to soar in excess of 2.5 million mt of lithium carbonate equivalent by 2030, a fivefold increase from 500,000 mt in 2020, while its production will not even triple, growing from 500,000 mt of LCE in 2020 to 1.2 million mt by the same year.