Chilean president Gabriel Boric, seeking to expand the country’s long stalled lithium industry, reportedly has tasked state owned Codelco, the world’s largest copper producer, to lead the charge of developing the white metal needed for electric vehicle batteries.
A Reuters report noted Chile was already the world’s second largest producer of lithium after Australia but demand was exploding worldwide as automakers gear up to churn out electric vehicles. Chile has the world’s largest known deposits of lithium and Boric’s announcement in April had given Codelco responsibility for negotiating deals with new companies as well as current lithium miners Albemarle and SQM.
The goal was to get the companies to enter voluntary state-controlled partnership before their existing contracts expire. At the same time, Codelco wants to boost its output of copper which has slumped to its lowest in a quarter century.
Some analysts have questioned whether the copper company with no experience as a lithium miner can tackle both challenges at once. But industry insiders told Reuters Codelco wold probably focus its own resources on copper while negotiating contracts for lithium operations and letting other miners do the work.
“It could be Codelco only contributes capital,” said one of the sources with knowledge of executive decision making, a strategy which could see the state firm hold a majority stake in future projects but leave operations to private partners.
Chile could end up recreating the model Indonesia used with Freeport-McMoRan, where the firm gave up majority control to the state but remained the operator, a former Codelco senior executive told the news agency.
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By GlobalData“Codelco can resolve the lithium issue with relatively few people,” added the Reuters souurce. “Codelco may have 51% but I don’t think it will be the operator.”
Two Codelco sources with knowledge of resource planning and strategy told the news agency the lithium units were being run by compact teams and there was no plan for major hiring as talks with SQM and Albemarle moved forward.
The sources said the lithium strategy was being led by executives including Jaime San Martin, manager of new business development, known by some within Codelco as “lithium man”. Finance VP Alejandro Rivera was also closely involved.
Codelco chairman Maximo Pacheco told Reuters that while the firm had set up two lithium subsidiaries Salares de Chile and Minera Tarar, it would first see how talks went before making any recruitment drives.
“Based on that and the progress of the negotiations we’re having to build these public-private alliances, we’re going to define the organisation of human and capital resources,” he said.
Reuters said Codelco had already started talks with SQM, whose existing lithium contract expires in 2030. Albemarle had said it was waiting to begin negotiations until closer to its contract’s expiration date in 2043.
Pacheco and other executives said lithium plans would not weigh on copper, but outside experts were sceptical.
Juan Carlos Guajardo, head of consultancy Plusmining, said building up Codelco’s lithium expertise from almost zero would nonetheless take up resources.
“The agreements will require high involvement of top management as they are strategic decisions,” Guajardo told Reuters. “But I think lithium is an excellent opportunity for Codelco to help them navigate their very difficult copper situation.”
