2023-06-11 14:59:40
The South American country has one of the largest lithium reserves in the world, an element that, as described by the environmental newspaper Mongabay, has a fundamental and strategic role for the energy transition. Known as white gold, it is – according to the UK Royal Society of Chemistry (RSC) – a metal found mainly in natural brines, oil wells, seawater and geothermal fields. It is the lightest metal known and has excellent conduction properties for heat and electricity.
Because of this, lithium is to Chile what oil is to the Middle East or Venezuela: a bargaining chip and a gigantic economic opportunity. Former Chilean President Michelle Bachelet wrote in a column for the newspaper The country of Spain that the challenge “is that Chile becomes the main producer of lithium in the world, increasing its wealth and development.”
The southern country is today the second world producer of this element, only behind Australia. This is making it the epicenter of the new global geopolitical divide.
WEEK He spoke with María Elina Cruz, a lawyer from the Pontificia Universidad Católica de Chile and a Ph.D. in Economics, who worked at the Production Development Corporation, known as Corfo. Cruz explained that Chile not only has 48 percent of the world’s marketable lithium reserves, but also has an important competitive advantage over other countries: “Chilean lithium is in salt flats, that is, it is in the water. So its extraction is much easier than in other parts of the world, such as Mexico, Australia and Canada, where it is found in the rock. That makes it necessary to go in to chop it and it costs four or five times more than extracting it from the salt flats.”
“Chile’s advantage is that Bolivia is not marketing its lithium and Argentina does so only depending on the province in which the salt flats are located.” Also, another advantage is the location of the salt flats. The main one is in the Atacama desert, which represents a benefit in terms of extraction, since the conditions of the place make it easier.
In fact, according to Cruz, it is very difficult for the country to grant concessions to private companies, since lithium in its first phase is also uranium. and, as explained by the Mexican media The Economist, was used to create the hydrogen bomb in the 20th century. So, the regulation of the mineral is very high, since it is wanted to avoid that it is misused.
Besides, The country He mentions that currently only two private companies have concessions in Chile, specifically in the Atacama salt flat: the American Albemarle and the Chilean SQM.
For this reason, Boric’s proposal raised doubts. What did he mean by nationalizing all lithium? Will it expropriate Albemarle and SQM? The answer came through the controversial creation of the Lithium Strategy, an action plan in which Codelco, a Chilean public company, would create two new subsidiaries to exploit this mineral: Minera Tarar SpA, which will focus only on the exploitation from Atacama; and Salares de Chile SpA, which will boost lithium-related activities nationwide, including the activation of new salt flats.
However, Boric is not planning to expropriate anyone at the moment. In fact, in a speech he assured that they are planning several alliances with Albemarle and SQM, which must be taken advantage of before their contract expires in 2030.
This initiative comes at an excellent time, as the demand for lithium is growing more and more and is slowly beginning to replace oil in demand, since this material is used for the batteries of electric cars and as fuel for the new wave of household appliances that will go out into the world to play.
Indeed, according to the Metalery.com portal, which is in charge of tracking the price of metals worldwide, in 2012 a ton cost $4,000 and by 2016 the price had risen to regarding $7,700. This makes the new lithium policy a unique occasion. “It is an opportunity for economic growth that is unlikely to be repeated in the short term”, expressed the president of Chile.
This is also believed by former President Bachelet, who in her column for El País added: “What the Strategy does is add another modality with public and private associations to develop this activity in joint ventures, especially to develop new projects.”
But not everything related to this project is gold, because, according to Cruz, this is a very broad policy that really does not solve anything and leaves Chile in the same legal limbo in which it has always been. “If you asked me today how someone exploits lithium in Chile, I wouldn’t know what to answer.”
“It is true that the fact that there is already a policy to exploit it is an advance, but it is still very ambiguous and leaves much to be desired.” For Cruz, politics should not be regarding nationalizing lithium, since it already belongs to the country. It should revolve around the exploitation of other salt flats.
Currently, the only salt flat where exploitation is allowed is the Atacama, but according to Cruz, there are at least 50 other salt flats. “They are not exploited for fear of the military use that might be given to this mineral, but this seems silly to me.”. Policy should expand exploitation so as not to waste a chance to generate wealth for the country.
“It is very sad to think that due to a lack of legal clarity, Chile will lose this unique opportunity,” he says. In addition, he adds that Boric’s policy has not really changed, and Chile, as always, remains in a legal limbo that does not allow it to move forward, even now that the door is open.
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