This is a key decision for the energy transition and high technology sectors. Thursday, April 20, the President of Chile, Gabriel Boric, announced on television his desire to nationalize part of the production of lithium, a mineral essential for the construction of batteries for electrical appliances. Chile is the world’s second largest producer and the industry is booming.
Stated objective: “That our country becomes the world’s leading producer of lithium, to increase its wealth, by distributing it fairly”, declared Gabriel Boric. Part of the 39,000 tonnes produced each year will therefore be entrusted to the National Lithium Company, after negotiations with private players. In 2022, lithium sales increased by 777% in the country, whose territory would be one of the richest on the planet in this area.
Lithium is essential for the production of electric batteries, a key component to put an end to thermal cars, and already essential for our phones and laptops. Nationalization “is the best chance we have to move to a sustainable and developed economy. We cannot afford to waste it”, developed Gabriel Boricwhich hopes to catch up with Australia, the country king of lithium with its 61,000 tonnes of exports.
The Chilean president has also promised relatively environmentally friendly extraction and conservation, as well as a new model of public participation, including direct dialogue with representatives of indigenous communities.
“A public-private partnership”
Before taking effect, nationalization must be approved by Congress. The debates promise to be lively. Private producers are influential in the country. If the law passes, the lithium giants, the Chilean SQM and the American Albemarle, will have to transfer control of mining operations to the National Lithium Company. The government will not terminate the contracts which run until 2030 and 2043 respectively, but future agreements will be concluded under the control of the State.
A way to soften the state takeover, after the brutal nationalization of copper carried out in the 1970s. “This is not a classic expropriation; it will rather be a public-private partnership in which the company public collaborates with capital”, summarized this Friday the political scientist Thea Riofrancos, specialist in the subject, on Twitter. Thus the public company will accept, for example, private capital, while remaining under the full control of the State.
The distribution of the resources necessary for the energy transition represents one of the challenges of the current climate crisis. Mexico nationalized its lithium deposits last year and Indonesia banned exports of nickel ore, an essential material for batteries, in 2020. France recently announced the opening of a lithium mine in Allier, a first in the area.