Australian acquisition opens the door to Codelco's lithium ambitions

The purchase of Australia’s Lithium Power International (LPI) by Chile’s Codelco will allow the state-owned miner to operate the Blanco project in the Salar de Maricunga and potentially take on new lithium assets.

However, Codelco’s success will depend on dialogue with surrounding indigenous communities and with mining concessionaires in the salt flat.

The US$224mn transaction was confirmed by Australian authorities, Codelco said in a statement on Monday. This after directors and shareholders of LPI considered the sale was the only way to promote Blanco under Chile’s lithium strategy, which is based on public-private partnerships.

As of Tuesday, LPI shares ceased to be traded on the ASX as ownership passed to Salar de Maricunga, a Codelco subsidiary.

But LPI's landholding in Maricunga, which is in northern region Atacama and is considered Chile’s second biggest lithium deposit after the Salar de Atacama, has faced controversy.

Talking with BNamericas, Raúl del Barrio, CEO of local junior RJR Salar, said his company won a court ruling to annul 600ha of mining concessions of Minera Salar Blanco, a subsidiary of LPI.

The reason was due to the overlap of the Salar Blanco concessions with those of RJR, although according to Del Barrio the defendant has not respected the ruling.

"Despite there being a legal case objecting to the coordinates, Salar Blanco has continued with its actions, failing to comply with what was determined by the judge and even with the mining code that is there to protect legally constituted concessionaires," he said.

While the area is not included in the property that will pass into Codelco’s hands, it is an issue that still needs to be resolved, he said.

Meanwhile, Codelco continues exploring in its Maricunga mining concession, for which it has a special operating contract (Ceol) from the mining ministry along with authorization to sell and export lithium from nuclear agency CCHEN with a maximum extraction quota of 325,045t of lithium, or about 20,000t/y of lithium carbonate equivalent (LCE), for 34 years.

Although the conditions exist to develop a large lithium project together with a private partner that provides the knowledge and financing, Codelco's landholding straddles the Nevados de Tres Cruces national park, and there are other obstacles.

“About 30% of the assets are within the park, so it contains protected areas and priority sites for conservation,” according to a presentation from the state company describing its lithium projects. (See the Documents box in the top right corner of the screen.)

Indigenous communities living in the surrounding areas, such as the Colla, have expressed objections.

“One of the demands is to participate on the boards of directors of the new public-private partnerships that will exploit and market lithium from Maricunga,” Ariel León, former advisor to the Colla Pai Ote community, told BNamericas.

León added that the community fears Codelco's “history of environmental disasters, whose responsibility is institutional, and that the salt flat should not be destroyed by virtue of creative accounting. We don’t want a lithium monopoly, but rather a diversity of actors.”

Adding the Blanco area to Codelco's current holdings and those it will receive within the framework of a preliminary agreement with local lithium producer SQM, the state copper giant would control nearly 9,700ha in Maricunga, that is approximately 70% of the salar.

Blanco could produce 15,200t/y of battery-grade lithium carbonate for 20 years, with an investment of US$626mn, according to the feasibility study prepared by Minera Salar Blanco for the initial phase.

The project received environmental approval in 2020 to build a plant with capacity of 58,000t/y of potassium chloride and 20,000t/y of LCE and has a CCHEN license to export with a maximum quota of 88,885t of metallic lithium or 472,868t of LCE over a period of 30 years.

To become the leader in Chilean lithium production, Codelco created the Salares de Chile holding company, which includes Minera Tarar for business dealings with SQM in the Salar de Atacama and the Salar de Maricunga unit, which will be responsible for developing Blanco.