Chile's mission to be a key supplier for the energy transition

Chile could become the darling of investors given its potential in lithium, copper, green hydrogen, renewable energies and the digital economy, according to panelists at a Council of the Americas event held in Santiago.

A little over a year after the national lithium strategy was announced, the country has managed to establish the foundations of a public-private partnership between state copper miner Codelco and private company SQM. Finance minister Mario Marcel told the gathering on Tuesday that the mining ministry has received  88 expressions of interest have been received from 54 companies based in 10 countries to develop projects in 26 salt flats.

“We will increase [lithium] production next year as a result of the agreement between SQM and Codelco, we will have a combination of joint ventures between the public and private sectors, and a multiplicity of entirely private projects, and at the same time, we will maintain 30% of the salt flats as protected areas,” Marcel said.

Regarding copper, of which Chile is the world’s largest producer, the minister welcomed the arrival of new capital. "Investment plans have tripled for the period 2024-27 compared with a year ago," he said, despite the uncertainty generated by a new mining royalty that increased taxes for large copper producers.

At the conference hosted by the US business organization that seeks to promote free trade in the Americas, Marcel also highlighted a portfolio of energy storage projects that exceeds US$1bn.

He accepted the difficulty of operating an interconnected system "where the sources of energy generation are distant from the demand centers."

To promote green hydrogen, the minister cited a government action plan that considers an investment of over US$1bn starting this year. He also highlighted the construction of 122 datacenters and another 28 digital economy projects under development.

“In the coming months, the science ministry will announce a promotion policy for this industry that will be strengthened as a source of digital services for Latin America with the construction of an underwater cable that will link us with Asia-Pacific,” Marcel said.

Susan Segal, CEO of the Council of the Americas, referred to Chile as a preferred destination for investors due to its stability as a country and its benefits in riches for the energy transition. "We trust in the economic and political future of Chile," she said.

Challenges

Codelco chairman Máximo Pacheco said it is key to continue advancing in technologies and social legitimacy. Only by improving social perception towards mining will it be possible to increase production and "contribute to unsatisfied [copper] demand towards 2030-32 that is estimated at 6Mt, while the current market is 25Mt," he said. 

Regarding the partnership with SQM, he said the most difficult thing has been structuring "the largest lithium company in Chile in the midst of very high public visibility."

“Every time we make decisions, we have to be accountable,” he added.

Mario Larenas, country manager for Chile at Freeport McMoRan, stressed the need not to lose sight of the competition and the large amount of exploration carried out around the world.

In order not to miss the opportunity to turn the country into a key supplier for the global energy transformation, Larenas emphasized improving the sectoral permitting system and the granting of maritime and geological concessions.