extractive industries

Chile’s Lithium Reserves: The Nationalization-Privatization Battle

October 22, 2012

by Olivia Crellin

Chile has embraced extractive industries as a tool for sustained economic growth, but this relationship does not come without controversy. At the beginning of this month, only one week after the government had announced the winner of its lithium contract, the concession had been scrapped and Sub-Secretary of Mining Pablo Wagner had resigned.

Chile is the world’s biggest lithium producer, generating 30 percent of the world’s profits on the sale of raw lithium and sitting on an estimated 23 percent of global lithium reserves—second only to neighboring Bolivia.

The latest controversy began on September 24 when a 20-year Contrato Especial de Operación de Litio (Special Lithium Operation Contract—CEOL) was awarded to Chilean company Sociedad Química y Minera de Chile S.A. (SQM). SQM was one of three companies whose bids to explore Chile’s lithium potential had been accepted by the government.

SQM currently produces 24 percent of the world's lithium and is only one of two lithium producers operating in Chile. The concession, which was sold to SQM for around $40.6 million, would have allowed the company to begin mining a further 100,000 tons of lithium from the government-owned Salar salt flats in the northern Atacama Desert.

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Tags: Chile, extractive industries