In a landmark move set to reshape the global lithium market, Chile's state-owned copper giant Codelco and private miner Sociedad Química y Minera de Chile (SQM) have officially joined forces. The two companies announced the creation of a colossal new entity dedicated to exploiting lithium, the lightweight metal crucial for electric vehicle (EV) batteries and clean energy technologies.
A Strategic Partnership for a Critical Resource
The new public-private partnership, to be named Nova Andino Litio SpA, was unveiled on a recent Saturday. Codelco hailed the agreement as one of the most significant in the history of Chilean business. The core objective of this alliance is to jointly ramp up lithium extraction and production in the famed Atacama salt flat region in northern Chile, home to some of the world's richest lithium deposits.
This deal is a central pillar of the National Lithium Strategy announced in 2023 by the leftist government of President Gabriel Boric. The strategy explicitly aims to reclaim Chile's position as the undisputed global leader in lithium production, a title it lost to Australia nearly a decade ago. Chile currently holds the position of the world's second-largest lithium producer and possesses an estimated 40 percent of global lithium reserves.
Operational Scope and Global Approvals
According to the official statement from Codelco, the newly formed company will carry out lithium exploration, extraction, production, and commercialization activities in the Atacama salt flat until the year 2060. The partnership received the final necessary regulatory clearance from Chilean authorities earlier in December, making Chile the last country to approve the deal.
The agreement had already been scrutinized and approved by more than 20 national and international regulatory bodies, including those in China, Brazil, Saudi Arabia, and the European Union. Notably, China's approval came last month. This global green light is significant, especially considering that Chinese firm Tianqi holds a 22 percent stake in SQM, linking the venture to a key player in the global battery supply chain.
Ambitious Targets and National Benefit
The production ambitions of the joint venture are substantial. It aims to increase lithium output by approximately 300,000 tons per year from the Atacama operations. To put this in perspective, Chile's total lithium production in 2022 stood at 243,100 tons. Ricardo Ramos, the CEO of SQM, stated that this joint venture enables the structured development of the Atacama salt flat for the benefit of global markets.
The financial structure of the deal ensures significant returns for the Chilean state. Codelco detailed that the Chilean government will receive about 70 percent of the operating margin from new production between 2025 and 2030. This share is set to rise to 85 percent starting in 2031. Lithium, often dubbed 'white gold,' contributed three percent to Chile's total exports in 2024, a figure poised for major growth.
This strategic partnership marks a decisive step by Chile to leverage its vast natural resources, strengthen state involvement in a critical industry, and secure a dominant position in the fast-growing global market for electric vehicle battery materials.
