On Thursday, April 20, the President of Chile, one of the world’s largest lithium producers, Gabriel Boric announcethat The country’s lithium mining activities have been nationalised. Lithium is a particularly demanded raw material in batteries, especially in electric vehicle batteries. Nationalization aims to promote environmental protection and strengthen the Chilean economy. With the decision, lithium mining operations in Chile will be transferred from mining giants SQM and Albemarle to a state-owned company.
The transition will take place in Chile’s lithium mines not so long ago
According to many, the situation will make it difficult to manufacture electric vehicles. After all, more and more countries decide to seize the main natural resources. For example, Mexico nationalized lithium mines last year, and Indonesia banned nickel exports in 2020. In the future, even in Chile, mining contracts will only be issued if the activity is carried out in a state-controlled partnership. There is no point in talking about immediate effects. Boric stated that the contracts currently in force will not be dismissed, but their renewal will not be allowed.
Albemarle, the world’s largest lithium producer, has a contract that expires in 2043, and that of SQM expires in 2030. The government is confident that Otherwise, both companies would be open to entering into a partnership with the Chilean State even before the expiration date. So far, only public statements have been released by the two companies, according to which the decision has no impact on their business. However, this will certainly improve the situation of countries with large reserves of lithium and whose mining activities have not been nationalized – such as Australia. In Chile, the state-owned company Codelco was tasked with creating the state-owned lithium company. They will also obtain new exploration and extraction permits in the future.
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