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Chile’s Lithium Industry – Where does it currently stand?

Chile has the world’s largest lithium reserves, but it has been slow to capitalise on new demand. Although the country remains as a top producer, it has been losing ground to global competitors for several years.  First, it was overtaken by Australia as the world’s top lithium supplier in 2017 and now Argentina is set to push Chile back one more spot.

Chile lack of growth is mainly due to old laws that made lithium a strategic mineral. This has made it difficult to attract new investment since there was no clarity on how projects should advance. Companies instead turned to Argentina where lithium is treated the same as any other mineral.

Last month, the Chilean government announced their long-awaited National Lithium Strategy. The lack of details and clarity made it a target for international media who claimed Chile was nationalizing the industry. You can see our previous article here that explains the strategy.

Since the announcement, new details have been released.  With this in mind, we have provided a recent “snapshot” of the Chilean Lithium Industry so that everyone can understand where it currently stands and where it goes from here. 

Current Producers

  • SQM has increased production to approx. 180,000 mt/year of lithium carbonate and 30,000 mt/year of lithium hydroxide, a threefold increase from its output in 2018. The company is currently working on a new expansion of its Carmen chemical plant which will increase production to 210,000 mt/year of lithium carbonate and 40,000 mt/year of lithium hydroxide starting in 2023.
  • SQM is preparing technical information to develop the US$1.5bn Salar Futuro project in the Salar de Atacama salt flat. Salar Futuro will involve advanced evaporation technologies for a “significant part” of the brines and applying the direct extraction method to reduce extraction of brines and reinject them into the aquifer, cutting average pumping by 50%.
  • SQM’s contract with the Chilean governments is until 2030. The agreement allows SQM to grow its lithium production for the term of the contract. SQM has already announced it has entered into negotiations with Codelco, the new government entity that will be tasked to manage the lithium industry during the transition to a proposed new state lithium company.
  • SQM has contributed over US$1bn in taxes to the treasury during the first quarter of 2023 under its current contract
  • For more information on SQM technology strategy – see our previous article here.
  • Albemarle inaugurated its US$500 million La Negra III/IV plant in 2022, which is billed as one of the most modern chemical conversion plants in Latin America. It will help the company double its production from 45,300t/y to 85,000MT of lithium carbonate per year.
  • As part of the investment, a new thermal evaporator was installed, which reduces the amount of freshwater used per metric ton during the process at La Negra. The technology is expected to reduce water consumption by up to 30% per metric ton.
  • Albemarle current contract with the government agency Corfo will expire in 2043 but the company has publicly announced that it will start negotiations well in advance.
  • Albemarle believes that it will be able to expand production using direct lithium extraction near 2028/2029. It has already secured environmental permits for a reinjection pilot programme that will start this year to understand how the reinjectionof water should be done in the Atacama salt flat.

New Government Player – Codelco

  • Even before the new national lithium strategy was announced, Codelco was tasked with exploring Salar de Maricunga in the Atacama region.
  • Codelco has invested US$15mn since last year to collect hydrogeological data and evaluate resources in the brine. Of the 132 samples analyzed in the laboratory, extracted from the perforation of 10 wells, concentrations ranging between 517 and 1,787 milligrams per liter (mg/l) were observed, with an average of 1,073 mg/l and a median of 978 mg/ he.
  • In total, 2,368 meters were drilled in the salt flat, reaching maximum depths slightly above 400 meters in the deepest well. The drilling campaign was key, as it verified that Maricunga is the second-best salt flat in the world in terms of lithium concentration, after the Salar de Atacama.
  • Next steps are consolidating the exploration results and estimating the total lithium resources under the explored mining properties, which is expected to be completed during the second half of this year. It is estimated that at the beginning of 2024 the first economic profile study of the project will be carried out.

National Lithium Strategy – What is Next?

  • National Lithium Company – To create a state company, the government will send to the Congress a bill in the second half of the year that creates the National Lithium Company. Approval requires a 4/7 majority.  
  • Existing Lithium Producers – Corfo, the institution that manages the mining concessions currently in the Atacama salt flats, will mandate Codelco to search for the best ways to achieve, from now on, the participation of the Chilean State in the extraction of lithium in the Salar de Atacama. Consequently, companies with existing contracts will need to negotiate with Codelco before their current contracts end. As mentioned above, SQM’s and Albemarle contracts end in 2030 and 2041. 
  • New Exploration – Special operational contracts will be awarded to Enami and Codelco, in areas where there are currently projects that are in different stages of development. These state companies will be able to decide if it is convenient or not to create joint ventures with other private companies.
  • Other Salt Flats – For the other salt flats that have been considered for exploitation, a public bidding process will begin for private exploration contracts, added to the prospecting that we will be carried out by the State itself. If the exploration results show potential, the private entity that carried out the exploration will have a preferential option to request an exploitation contract in association with a state company, such as the National Lithium Company, Codelco, or Enami.
  • Technologies used for Extraction – In respect to the salt flats that are exploited, the implementation of technologies that minimize the environmental impact will be required, such as direct lithium extraction. It is important to note that to date, no technology has been implemented at the production scale but there are several companies who already have demonstration plants.


The announcement of the national lithium strategy was not ideal as it was quite ambiguous regarding details. Forgetting about the botched announcement and considering new information that has been released since, most experts agree that the new strategy at least gives some clarity to what process companies need to follow to bring a new lithium project to production.

Chile finds itself at a crossroads. On one hand, Chile needs to increase production to profit from future demand. On the other, the government needs to extract value for the country while respecting the environment and local communities.

The lithium industry can have a huge impact on Chile’s economy. The two companies that are operating, SQM and Albemarle, supplied more than 30% of the global market last year. They contributed US$5bn to public coffers last year, double the contributions of Codelco. Just imagine when there is more project what those tax dollars could do for the country.

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