Codelco to renegotiate SQM, Albemarle lithium contracts

Chile’s development agency Corfo has tasked state copper miner Codelco with renegotiating SQMand Albemarle's lithium contracts.

Although SQM’s contract extends through 2030 and Albemarle’s through 2043, all parties agreed on renegotiations after the government presented its national lithium strategy in April, which involves public-private partnerships with the State holding a majority.

"Existing contracts will be fully respected, while the ownership of mining properties will remain in the hands of Corfo to be developed through lease contracts," Corfo head José Miguel Benavente told a press conference on Wednesday, where he dispelled doubts over the continuity of operations in the Salar de Atacama.

SQM and Albemarle are Chile’s only lithium producers and signed special contracts with Corfo to start extraction.

Last year, the lithium operations contributed US$5bn to public coffers, according to fiscal advisory council CFA.

Codelco chairman Máximo Pacheco told the press conference that the talks will ensure operational continuity. Codelco will control the enterprises that are formed, according to a statement.

The miner has been exploring Salar de Maricunga since 2020, with results suggesting it hosts the country’s second biggest lithium reserves. Incorporating extraction at Salar de Atacama would therefore be a strategic move.

“We will consolidate our global position as producers of two minerals critical for the global energy transition,” Pacheco said, referring to copper and lithium.

Corfo established a series of new conditions in the new contracts with SQM and Albemarle. The contracts must be approved by Codelco’s board and regulatory agencies, the statement added.

Some conditions mandate upholding payments to the State, preferential lithium prices for companies that add value in Chile, keeping R&D in the country and promoting more scientific-technological cooperation.

Companies must also commit to implementing sustainable lithium extraction technologies and production processes, especially regarding hydrogeological, water and energy matters, as well as complying with higher community relations standards.

Lithium prices surged 259% last year. Chilean lithium carbonate exports jumped from US$250mn in 2015 to US$7.76bn in 2022, according to the CFA.

Together, SQM and Albemarle produce around 250,000t/y of lithium, making Chile the second largest producer worldwide.

Codelco's Máximo Pacheco (left) and Corfo's José Benavente sign the cooperation agreement. Credit: Codelco