After the mammoth battle between Codelco and Anglo American, resource nationalism is back on people’s lips in Chile.
But this time it’s lithium, not copper.
SQM, a Chilean company and the world’s biggest producer of the mineral that is used for smartphone batteries and hybrid cars, has won a tender to develop a lithium concession in Chile after beating other offers with its $41m bid to develop the concession for a 20-year term. Keep it in the family, as it were?
Yet the tender has drawn criticism in Chile, with the government accused of surrendering a key resource to private operators and opposition politicians seeking to halt the tender in the courts.
Not at all says Pablo Longuiera, the economy minister. He dismissed criticism as a “provincial argument” and said, “We’ve done a great deal for all Chileans.”
SQM is already the world’s top lithium producer and Chile is home to the world’s second-largest reserves of the mineral, which is classified as “strategic” and for which regular mining concessions cannot be awarded. Strategic minerals can, however, be developed under special contracts.
And with demand exploding – Chile sees it tripling in three years – the government says the SQM concession will be a good deal, boosting world supply by about 15 per cent and raising $350m via a royalty. Since 1998, the price per tonne for lithium has surged a whopping 238 per cent – and Chile has 40 per cent of the world’s reserves in the Salar de Atacama.
Resource nationalism never sounded so lucrative.
Bolivia plans first bond since early 1900s, FT
Latin America: Tide of resource nationalism ebbs, FT
Scramble for lithium gathers pace, FT (2010)
Lithium: a commodity in increasing demand, FT (2010)