Chilean government and president-elect face off in lithium bid

The Chilean government announced this Wednesday (12) a million-dollar concession to two new companies in the Chilean market for the extraction of lithium, which generated criticism from President-elect Gabriel Boric and the political opposition.

The Ministry of Mines confirmed that the companies BYD Chile SpA (China) and Servicios y Operaciones Mineras del Norte SA (Chile) obtained the contracts, for US$ 61 million and US$ 60 million (R$ 339 million and R$ 334 million) , respectively, for 20 years.

The bidding generated controversy because it was held with just three months to go before the end of the mandate of conservative Sebastián Piñera, and despite requests from the leftist Boric and the parliamentary opposition to interrupt and analyze the process.

concession

Each company will have a quota of 80,000 tons — which represents 1.8% of the known lithium reserves in Chile — with a period of seven years to carry out the geological exploration, studies and development of the project.

The contract gives another 20 years for the exploration of light metal, considered key to the development of electric vehicles. “They represent 1.8% of the known reserves of lithium in our country”, informed the Ministry of Mines.

Two months before Boric replaced Piñera, the government decided to go ahead with the tender, despite criticism, considering that the concessions “will allow for an increase in the dynamism of the local lithium industry, so that Chile can regain its position on the world stage”, indicated the folder.

The bidding took place in October 2021. Five of the more than 70 bids were selected. The Chilean government had until next Friday to announce the winners.

According to the Ministry of Mines, until 2016 Chile was the world’s largest producer of lithium, with 37% of the market, but today it ranks second —​behind Australia— with 32%. If the country fails to increase its production, by 2030 its share could drop to 17%.

Hours after the results were announced, the Minister of Mines, Juan Carlos Jobet, appeared at the Congress, where he had been summoned by the opposition for a special session that intended to analyze the terms of the concessions.

In Parliament, opposition deputies showed their irritation with the government’s decision and left the place, “criticizing the total lack of transparency in the process”, informed the Chamber of Deputies.

“It is a denial of state power that the government, an hour before this special session to which we were summoned precisely to discuss this matter and close agreements relevant to the country, has granted two private companies the exploration of lithium for (almost) 30 years. It’s a lack of respect for a power of the State”, said Raúl Soto, opposition deputy of the Party for Democracy.