Background on Key Players and Relevance
Codelco, the state-owned Chilean mining company, and SQM, a leading global producer of lithium and iodine, have secured antitrust approval for their lithium extraction partnership from Chile’s local antitrust authority. However, the deal still awaits approval from China.
The Significance of the Partnership
This collaboration is part of President Gabriel Boric’s strategy to increase state control over the lithium industry, a crucial metal for electric vehicle battery production. The alliance in the Atacama salt flat operations has already received green lights from the European Union, Brazil, South Korea, Japan, and Saudi Arabia. Nevertheless, it has faced opposition from local legislators and SQM’s Chinese partner, Tianqi.
Progress and Next Steps
Codelco announced that the National Economic Prosecutor’s Office has approved the partnership, subject to specific information management and operational protocols. The only remaining approval comes from China’s regulatory body, as per the conditions set in May of the previous year when the agreement was signed.
Codelco, the world’s largest lithium producer, supplies a significant portion of its output to China. In the second quarter of this year, there has been robust demand for copper from China.
Key Questions and Answers
- What is the nature of the partnership between Codelco and SQM? The Chilean state mining company, Codelco, and lithium producer SQM have formed a strategic alliance to jointly exploit lithium resources in Chile’s Atacama salt flats, a critical region for lithium extraction.
- Why is this partnership significant? This collaboration is part of President Gabriel Boric’s broader strategy to strengthen state control over the lithium industry, which is vital for manufacturing electric vehicle batteries.
- Which entities have already approved the partnership? The partnership has received approval from various international bodies, including the European Union, Brazil, South Korea, Japan, and Saudi Arabia.
- Who opposes the partnership, and why? Local Chilean legislators and SQM’s Chinese partner, Tianqi, have expressed opposition to the partnership.
- What is the current status of regulatory approvals? The Chilean antitrust authority has approved the partnership, but it still requires approval from China’s regulatory body.
- What role does Codelco play in the global lithium market? As the world’s largest lithium producer, Codelco supplies a substantial amount of its production to China, which has shown strong demand for copper in the second quarter of this year.
