Doubts remain on how govt will choose private partners in Chile's lithium rush

After the Chilean State received 88 expressions of interest from companies and consortiums from 10 nations to develop lithium exploration and extraction projects, attention is now focused on the guidelines the authorities will use to decide the new private partners and the mechanisms for granting the special lithium operation contracts (Ceols).

“We will probably have a clear definition regarding the Ceols that will be assigned in April or May next year,” finance minister Mario Marcel said at a press conference on Tuesday. 

During that conference, the results were presented of a non-binding process led by the mining ministry to identify the capabilities of the interested parties and the preferred areas to develop lithium exploration and production projects.

While awaiting these definitions, some of the questions revolve around the sustainability standards that will be applied when selecting the companies or private consortiums that will eventually be involved in developing the industry, as proposed in the national lithium strategy.

Another concern is the regulatory framework that will be applied to guarantee the protection of saline systems. Along these lines, national mining association Sonami raised concerns about how the maximum brine extraction capacities will be defined, especially in cases where there is more than one entity extracting in the same salt flat.

“The assigned extraction capacities must harmoniously coincide with the technical limits of the salt flat. It is necessary to establish a clear criterion to increase the authorized extraction from the salt flat, based on the limits of each salt flat and the capabilities of the private sector,” Sonami president Jorge Riesco said in a statement.

Under the information collection process, 53 national and international entities chose 16 salt flats or saline lagoons that have been registered by Chilean geological and mining service Sernageomin, while 28 opted for other deposits and seven for salt flats or areas not included among the options offered by the government.

Of the total expressions of interest, 84% were made by a single company, with the remaining 16% made by consortiums or joint ventures.

Nevertheless, doubts remain over the lithium extraction methods that will be implemented. Some 80% of the proposals involve the use of direct lithium extraction (DLE) technologies, which can entail electrochemical formulas, ion exchange, solvent extraction or adsorption, among others. However, there is still "a lack of scientific evidence [about DLE technology] in large-scale environments, added to the absence of real experiences in Chile," Sonami warned in a study.

Jaime Alée, president of ESK Consulting and senior advisor to the energy center of Universidad de Chile, said in a BNamericas webinar that the approach towards DLE is related to the urgency of prioritizing production times to respond to high lithium demand and the existence of greater competition, “the factors of which are important from the point of view of business evaluation.”

Although DLE technologies offer improvements in terms of sustainability, since they promise a more rapid extraction process, greater lithium recovery from brines (rates average 80-90%), as well as the opportunity to return the brine to the water systems in conditions similar to their original state and greatly reduced water loss compared with conventional evaporation techniques, “the capex for DLE is clearly greater than operating with pools,” said Alée.

This factor must be considered in a market that will gradually be supplied with more lithium as new projects come online in other countries, “which will keep lithium prices low,” he added.

Another topic of debate is the lack of technical requirements to specify the use of DLE by project proponents. The mining ministry currently analyzes the projects received, considering aspects such as the financial capacity of the entities, production estimates, technologies and experience in mining projects.

According to the authorities, the guidelines for the delivery of the Ceols will be announced in August.

To find out more about the most favored salt flats and other aspects of the process to receive expressions of interest, see the report prepared by the mining ministry in the Documents box at the top right of the page.