Huge pools of brine containing lithium carbonate and mounds of salt byproducts stretch across a lithium mine in the Atacama Desert in Salar de Atacama, Chili on October 25, 2022. ​

Huge pools of brine containing lithium carbonate and mounds of salt byproducts stretch across a lithium mine in the Atacama Desert in Salar de Atacama, Chili on October 25, 2022.

(Photo: Lucas Aguayo Araos/Anadolu Agency via Getty Images)

Chilean President Unveils Plan to Slowly Nationalize Lithium Industry

While striving for "a sustainable and developed economy," the leftist leader must contend with legislative divisions, potential industry opposition, and Indigenous and environmental resistance to large-scale mining.

Leftist Chilean President Gabriel Boric on Thursday announced plans to slowly nationalize the country's lithium industry, aiming to take advantage of massive reserves of the metal, key to electric vehicle batteries and other technology, while protecting the environment.

"Today we present a national lithium strategy that's technically solid and ambitious," Boric declared during a televised address, outlining his plan—which needs congressional approval—to create "a Chile that distributes wealth we all generate in a more just way."

"This is the best chance we have at transitioning to a sustainable and developed economy," he argued. "We can't afford to waste it."

Reutersreported that "Boric said the country would look to protect biodiversity and share mining benefits with Indigenous and surrounding communities."

About 60% of the world's reserves are located in the South American "lithium triangle," which includes Bolivia (21 million tons), Argentina (19.3 million tons), and Chile (9.6 million tons), according to the U.S. Geological Survey. For now, Chile is leading those nations in terms of production and ranked second globally last year, after Australia.

Currently, Chile's lithium operations are limited to the Chilean company SQM and the U.S. firm Albemarle. Under Boric's plan, the government would respect existing contracts with those industry giants—set to expire in 2030 and 2043, respectively.

However, all future contracts for the metal will involve government-controlled public-private partnerships, Boric explained. He ultimately envisions a national company focused on lithium, but because creating one could be delayed by legislative divisions, agreements will initially be led by the state-owned copper mining company, Codelco.

According toThe Associated Press, "Boric said that in addition to being involved in mining, the government will promote the development of lithium products with added value, with the goal of becoming the world's leading lithium producer."

As the AP pointed out:

The minister of mining, Marcela Hernando, recently told Congress that the government cannot advance alone in the exploitation of lithium because "technology and knowledge are in private industry."

A public-private partnership is needed, Hernando said, though he added that "the state is the owner of lithium," which is an "uncompromisable" position of the government.

Boric's plan is part of a global trend. Mexican lawmakers voted last year to make lithium reserves federal property. Additionally, as the Financial Timesnoted, "Zimbabwe banned unprocessed lithium exports" and "Indonesia is curbing exports of commodities including nickel ore, which is used in batteries."

Thea Riofrancos—an Andrew Carnegie fellow, Providence College associate professor of political science, and Climate and Community Project member—tweeted Friday that resource nationalism is "all the rage" in the "Global South (Mexico, Indonesia, Bolivia) and North ('critical minerals' securitization) albeit from very distinct geoeconomic positions. But there's more to this."

"Boric situates this decision in the long sweep of Chilean history," referencing former President Salvador Allende's nationalization of copper, Riofrancos explained. "But this isn't a classic expropriation," because of the public-private partnership approach.

"Evidence from Latin America's Pink Tide era shows such partnerships can increase state revenues, which can fund social services and public infrastructure. But whether tech transfer and value chain upgrading occur is an open question," she said. "Boric flags both as crucial to his vision."

Riofrancos continued:

Just as importantly, and compared to both mid-century and Pink Tide era nationalizations, Boric cannot ignore the powerful wave of Indigenous and environmental resistance to large-scale mining in Chile and the region, nor the scientific evidence of damage to salt flat ecosystems.

Boric promises environmentally friendly extraction and conservation of 30% of Chile's salt flats (the location of lithium deposits), and promises a new model of public participation, including the first step [of] direct dialogue with representatives of Indigenous communities.

But these goals are in tension with his other key goal, which is to vastly expand lithium extraction in Chile's deserts as well as restore Chile to the position of top producer, a status now occupied by Australia (worth noting Argentina may soon overtake Chile for second place).

"And of course," she added, "all of these plans are subject to congressional approval and what I imagine will be a flurry of lobbying from the incumbent producers, SQM and Albemarle."

While Albemarle said that the development would have "no material impact on our business," Bloomberg highlighted that "SQM and Albemarle shares were down 7% and 4%, respectively, before the start of regular trading in New York on Friday."

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