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Chile Lithium Update

Chile has the world’s largest reserves of lithium, but it has been slow to capitalize on new demand. Although the country has remained a top producer, it has been losing ground to global competitors for a number of years. 

There are only two lithium producing companies in the country with no new producers. In fact, there are very few companies choosing to enter the market due to how lithium is regulated. Chile was overtaken by Australia as the world’s top lithium supplier in 2017. Even Argentina has been able to attract a strong portfolio of projects that are advancing to production.

This could all change with a recent announcement by the Chilean Government. Since October 13, 2021, the bidding rules for an upcoming lithium tender have been available for purchase. Chile will award five quotas of 80,000 tonnes each for the exploration and production of lithium in Chile.

Companies can be awarded a maximum of 2 quotas for a total of 160,000 tons. Companies that secure permits will have seven years to explore and develop projects which can be extended for another two years if needed. This will be followed by 20 years of production

Public tender conditions are available for purchase at the following link.

Demand for Lithium

Confidence in the price of lithium has been growing lately which is a change from 2018 when the prices retracted considerably. Fast forward to today, demand is growing, and pricing are increasing again.

For example, a laptop uses 30 grams of lithium carbonate, an electric bicycle requires 300 grams, an electric car contains more than 20 kilos, and a bus with the same characteristics needs more than 200 kilos. Recent projections suggest that world demand will quadruple by 2030, reaching 1.8 million tons of lithium carbonate with available supply the same year being approximately 1.5 million tons.

The anticipated shortage has sent prices of battery-grade lithium carbonate to an average of $28,675 per tonne in the first two weeks of October, an approximately 322.5% year-over-year price hike.


It may be a little premature to believe that the tender will do much to boost Chile’s output of lithium. The granting of the licenses is only the first step. Companies will need to find a location to develop their projects, define the technologies to be used, comply with all the regulatory and environmental requirements, and generate positive relationship with the local communities. Each company will need to navigate a complex environment where communities are concerned about water aquifers that sit below the salt flats.  

The chances of Chile regaining its leadership status are slim at best. In all likelihood, of the 5 quates awarded, only a few will succesfully bring new production online. Even that is wishful thinking.

This means that even with new production from Chile, the global demand for lithium will still outstrip supply. Chile will surely continue losing ground to other countries unless there is a considerable change to how lithium is regulated by the government. In addition, there will need to be creditable solutions to solve the issue of how water is used in the salt flats where the lithium is located.

Ax Legal is a legal and business advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at