Chile's Codelco and SQM begin negotiating lithium PPP

Chilean state-owned copper miner Codelco and the country's biggest lithium producer, privately owned firm SQM, have formally begun talks aimed at establishing a public-private partnership to extract the soft white metal in the Salar de Atacama starting in 2030.

The negotiations between the firms are part of the new national lithium strategy that the government announced in April. They are aimed at hammering out a corporate agreement that allows the State to participate in lithium production in the areas managed by SQM, whose contract with state development agency Corfo, owner of the assets in the Antofagasta region salt flat, expires in 2030.

Corfo has appointed Codelco to be the representative of the State in the meetings with SQM. The parties will discuss the guidelines to establish the partnership, as well as issues such as the sustainability of the salt flats, relations with surrounding communities and production technologies with a reduced environmental impact, Codelco said in a statement.

If the two companies can reach an agreement, it will be submitted for approval to the boards of Codelco and Corfo, and the new business model will be controlled by the recently constituted Codelco subsidiary Minera Tartar.

"We at Codelco will work hard so that these negotiations are successful and they allow us to achieve the objective of strengthening Chile's leadership in world lithium production," said Codelco chairman Máximo Pacheco.

Speaking to BNamericas, Víctor Pérez, a sustainable mining academic at Adolfo Ibáñez University's Faculty of Engineering and Science and former Codelco director for close to 20 years, said that the biggest challenge in the talks will be to establish a company or joint venture with the State that allows "increased production and added value, considering sustainable extraction."

Both SQM and Codelco have underlined that the talks could take several months and that the process will remain confidential. SQM has stated that the results of the negotiations will only be announced once the final documents have been signed.

Pictured: SQM CEO Ricardo Ramos (left) and Codelco chairman Máximo Pacheco. Credit: Codelco