SQM Defends Lithium Partnership with Codelco Amid Criticism

SQM

SQM, one of the world’s largest lithium producers, has defended its proposed joint venture with Chile’s state-run copper mining company Codelco, stating that the deal will benefit all stakeholders involved. SQM’s general manager, Ricardo Ramos, addressed the Chilean Senate’s mining and energy committee, emphasizing that the partnership would promote economic and operational continuity for the Atacama lithium operations well beyond 2030.

Ensuring Operational Continuity and Avoiding Disruptions

The public-private joint venture, aimed at running SQM’s lithium operations in the Atacama salt flat, is expected to prevent potential disruptions that might occur if a new private entity were to take over SQM’s operations when its current contract expires in 2030. Ramos argued that allowing Codelco, a government-backed company, to partner with SQM would ensure that both the country and its communities benefit from stable and increased lithium production.

Critics of the deal have expressed concern that a public tender process could have secured more favorable terms for Chile, but SQM and Codelco maintain that the JV agreement, set to finalize in 2025, is the most effective way forward. Under the deal, Codelco will have rights to 33,500 metric tonnes per year of lithium carbonate equivalent (LCE) and will take control of the operation by 2031, with SQM retaining a minority stake.

SQM is also seeking regulatory approval to expand its production capacity to an additional 300,000 tonnes of LCE between 2025 and 2030, supplementing its current output, which represents 20% of global demand. However, the deal faces a legal challenge from Tianqi Lithium, a shareholder in SQM, over the transaction’s approval process.

Chile’s strategy with this joint venture aligns with its broader goal of increasing lithium production while establishing a stronger state presence in the industry.