Chile Establishes New Company to Increase Lithium Development and Production

Two industry leaders in Chile – the state-owned copper giant Codelco and the leading lithium company SQM – jointly announced on the 27th that they will integrate resources from their respective subsidiaries to establish a new joint venture. The company will focus on the Atacama Salt Flat region in northern Chile, engaging in the entire value chain of lithium resource exploration, extraction, production, and commercialization. The partnership is set to last until 2060.

In announcements released simultaneously that day, the two companies emphasized that the establishment of this joint venture constitutes "one of the most critical collaborative projects in Chile’s commercial development history." This move also signifies that their partnership agreement for jointly developing Chile’s lithium resources under a public-private model has officially advanced from the conceptual framework to the operational implementation stage.

Looking back at the cooperation process, the Chilean government officially introduced the National Lithium Resource Development Strategy in April 2023, explicitly stating that the state will be deeply involved in all stages of lithium resource development. In December of the same year, guided by this strategy, Codelco and SQM signed a memorandum of understanding, reaching a preliminary consensus on establishing a joint venture. In May 2024, the two parties further finalized the details and officially signed the cooperation agreement.

According to the agreement, the operations of the new joint venture will be carried out in two phases:The first phase, from 2025 to 2030, will be led by SQM, with its existing lithium mining rights being extended.The second phase, from 2031 to 2060, will see Codelco holding a majority stake in the joint venture, occupying most of the seats on the board of directors, and leading the company’s strategic direction.Regarding profit distribution, the agreement clearly stipulates that during the period from 2025 to 2030, the Chilean government will receive 70% of the joint venture's operating profits. Starting from 2031, this share will increase to 85%。

As a critical mineral often referred to as "white gold," lithium has become an indispensable resource in the global energy transition and digital transformation. Chile currently holds a firm position as the world's second-largest lithium producer, with the Atacama Salt Flat serving as the country's primary lithium-rich region, where the vast majority of its lithium reserves are concentrated.