Comment by Simon Rees on Benchmark Mineral Intelligence

What if you held a resource that could ultimately change the world?

Do you start realising its value or do you wait, keeping it safe for a rainy day?

And what if that latent wealth resides in environmentally-sensitive areas – how will that influence your decision?

Chile is pondering these and many more questions as part of a long-standing and nuanced debate on lithium.

The country holds a significant proportion of the world’s known lithium reserves in high-altitude regions noted for salar brine extraction, with the US Geological Survey estimating the country has more than 7.5 million tons of identified lithium resources.

A select group of market participants dominate production, including SQM and Albemarle, the latter holding Chilean interests through its acquisition of Rockwood Holdings, the parent of Rockwood Lithium, at the start of 2015.

On February 1, the country’s mining ministry announced a memorandum of understanding (MoU) that Albemarle could grow its Chilean lithium carbonate output from 24,000 tons to 70,000 tons over the next four years.

The ministry estimates the deal will deliver between $70m and $100m a year into government coffers through royalties, taxes and other instruments.

Several days earlier, on January 25, it was reported that Codelco had established a schedule for a bidding process to evaluate and explore its lithium assets in the Maricunga and Pedernales salt flats.

Coldelco is the state-owned mining giant more widely known for its copper interests.

“The successful bidders would be in a preferential situation in terms of partnering with the corporation [Codelco] if the economic viability of those assets is confirmed,” the President’s office noted on January 26.

None of this points to a bonanza or even heralds a new lithium rush.

In their excitement, many commentators forget the material’s unique status in Chile; lithium is non-concessionary, accompanied by specific rules and regulations.

Even as far back as 1979, the country decreed that the rights to extract, process and trade lithium compounds resides with the State and its companies, or those it specifically agrees to operate with via Presidential assent.

On January 26, Chilean President Michelle Bachelet reiterated this stance after receiving the National Lithium Commission’s report on the country’s new National Lithium and Salt Flat Governance Policy.

“One of the first decisions that we made was to take up the commission’s call to reaffirm the strategic nature of lithium, which is the property of all Chileans, and to maintain its condition as a material that is not subject to concessions,” she said.

The policy creates a new regulatory framework to define conditions for lithium exploitation and the engagement of communities.

It also seeks to strengthen coordination between the Chilean Economic Development Agency (Corfo) and Codelco, the Chilean state-owned mining giant more widely known for its copper interests.

“I am fully confident that Chilean lithium will not be a case of frustrated development, but an example of a well-built future,” President Bachelet said.

Where other nations may seek to rush in, it seems Chile will maintain a slow, steady and purposeful approach towards lithium.

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