Mining Minister says that lithium contract with Codelco will be the new standard for the industry in Chile
Bloomberg 03/06/2018
The government is currently negotiating a lithium contract with state-owned Codelco, which will become the new industry standard in the country with the largest ore reserves.
While conditions such as royalty percentages remain confidential, a decree published last week in the official gazette revealed that the contract covers some 40 years and gives Codelco 8.5 years to explore its properties in the Maricunga salt flat.
"This contract is going to set a standard," Mining Minister Aurora Williams said in an interview from the PDAC conference in Toronto, adding that "the contract adds a set of elements that go beyond mining, including resources for research and development".
Chile is looking to increase lithium production, a key component of rechargeable batteries used in electric vehicles, at a time when prices are at a record high level. In less than a year, it has authorized higher quotas for Albemarle and SQM, the only two companies that do lithium mining in their territory. The lack of clear legislation has prevented other companies from operating in Chile. Prompt signature of the contract
The government hoped to approve new regulations on lithium before the expiration of its mandate on March 11, said Eduardo Bitrán in January, who is in charge of the Corfo development agency. Less than a week after Piñera takes office, Williams says the government intends to send a draft to the Comptroller General's office for study. The approval would be specified during the management of Piñera.
Regardless, the government estimates that the contract with Codelco will be signed soon, Williams said. The Comptroller must authorize the agreement before Codelco can announce a partner for the development of the Maricunga project. The lithium contracts signed recently between the state development agency Corfo and SQM and Albemarle also reflect the spirit of the lithium policy that the government established in previous moments of its management, he added.
There are clear indications that the copper projects interrupted during the decline will resume, said the minister and her words coincide with the growth of mining activity that reached 8.6% in January while non-mining activity increased 3.5% in the month, according to the Central Bank.
"It is an indication that there is more dynamism in the sector," he added.
Meanwhile, Cochilco forecast in January that the price of copper this year would be US $ 3.06 per pound (0.45 kilos). While the forecast assumes an average annual price, the estimate may now seem conservative, Williams said.
LPI Price at posting:
37.0¢ Sentiment: None Disclosure: Held
