Chilean state-owned miner Codelco has announced the start of lithium contract negotiations with chemical firm SQM.

Chile-based firm SQM is currently mining lithium from the Salar de Atacama project. The negotiations discuss the conditions for the extension of SQM’s contract for the project, which expires in 2030.

Regarding the subject of the negotiations, Codelco chair Maximo Pacheco stated: “We talked about the challenges facing the mining industry globally, that is, the high environmental, social and governance standards to which the negotiation will be subject.

“The increase in lithium production in the Salar de Atacama is a strategic objective for Codelco and for Chile because it is a huge contribution that we can make as a country to the energy transition.”

When Chile announced the nationalisation of its lithium industry in April, President Gabriel Boric stated that while current contracts would remain as they are, future contracts would only be awarded if the state maintained control in a public-private partnership.

State-owned copper company Codelco was appointed by the government to manage the lithium industry during the transition. Earlier this month, Codelco formed two subsidiaries to manage the lithium industry, Salares de Chile and Minera Tarar.

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By GlobalData

Codelco stated that Minera Tarar, the subsidiary in charge of non-Codelco activities, will act as controller of the Salar de Atacama project from the new contract’s start.

Salar de Atacama, which has been in operation since 1995, is a salt flat which contains lithium within its brine deposits. In its 2022 end-of-year report, SQM stated that 152,500 metric tonnes of lithium carbonate were produced from Salar de Atacama.

This is a substantial increase from 108,400 metric tonnes in 2021 and 72,200 metric tonnes last year, as well as indicates that the project remains a valuable resource going forward, potentially heightening SQM’s willingness to negotiate.