This is an overview of the politics of brine resources and reserves in the "Lithium Triangle" of South America, by The Economist. It is told from the perspective of nations rather than companies, and so sovereign risk and regulation get some attention, as well as state ambitions. Current environmental risks of expansion are left out. State leaders are optimistic about brine output growth, but does that stack up with reality? SQM gets a few mentions:
some highlights:
"The three countries have not been equally eager to seize the opportunity. Market-friendly Chile has a big head start. Argentina is hastening to make up lost ground, as the activity on the Olaroz salt flat suggests. Bolivia, whose resources are as large as Argentina’s, has barely begun to exploit them. Those differences suggest much about how the South American trio treat enterprise and investment more generally."
In Chile "Laws enacted in the 1970s and 1980s classify lithium as a “strategic” material on the ground that it can be used in future nuclear-fusion power plants. There is little prospect that Chile will soon build one of these, but controls on lithium production remain as a way of protecting the desert’s fragile ecosystem.
Just two companies, Chile’s SQM and Albemarle of the United States, are allowed to extract brine under leases that were signed in the 1980s. In addition, they are subject to quotas on the lithium they can produce from the brine, which also yields other minerals. The government wants to raise production. But the Economic Development Agency (Corfo), which holds the lithium reserves, is now engaged in a legal dispute with SQM, and so has refused to raise its quotas, which the company is likely to use up by 2021."
“Chile is going in the right direction, but more is needed,” says Daniela Desormeaux of signumBOX, a market-research company based in Santiago. For SQM, this progress is still too slow. It has turned to Argentina."
"Argentina’s newish president, Mauricio Macri, has tried to unblock investment, including that in lithium. In his first week in office the former businessman eased currency controls and started to scrap export taxes. His entrepreneurial zeal has influenced provincial governments, which are approving permits for exploration and extraction much more quickly."
In Bolivia "The government keeps an even tighter grip on lithium than it does on gas, its biggest export. YPFB, the state-owned natural-gas company, at least enters into joint ventures with private-sector firms. Since 2010 the right to extract lithium brine has been reserved for the state. Private firms can now do no more than gaze longingly upon the Uyuni salt flat near Potosí, the largest in the world.
The state’s foray into lithium extraction is not going well. It has not yet calculated how Uyuni’s resources translate into exploitable reserves, which normally happens before anyone sinks a well. Even so, it has built a pilot extraction operation and is pressing ahead with plans to construct a full-scale lithium-carbonate plant capable of producing 30,000 tonnes a year. The venture is behind schedule, well over budget and hobbled by a lack of expertise and technology, says Juan Carlos Zuleta, an economist who specialises in lithium."
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