Codelco, the national copper mining company of Chile, and SQM, the world’s second-largest lithium producer, have recently signed a definitive agreement to jointly mine the extensive lithium deposits in Chile’s Salar de Atacama salt flat.
This new agreement grants Codelco a majority share, aligning with President Gabriel Boric’s plan to boost lithium production under government control. Lithium is a crucial component in the manufacture of batteries for electric vehicles (EVs).
“Just as we have helped make Chile the global leader in copper production, we will now contribute to making our country a leader in lithium production, another mineral essential for the energy transition.” Codelco chairman Máximo Pacheco said in a statement.
Pacheco, a seasoned miner, pointed out that the partnership would need to undergo several more stages before it could be put into action.
This new agreement supersedes the one signed with the Chilean economic development agency (Corfo) in 2018, which was due to end in 2030. The collaboration will commence in 2025 and continue until 2060, with Codelco assuming overall management from 2031 onwards.
Critics of the deal, as reported by local news outlet El Ciudadano, argue that despite having six years to prepare either Codelco or the national mining company (Enami) to assume operations, the government has decided to leave it under SQM’s control.
Ponce Lerou, the 78-year-old controller of SQM, was penalized in 2014 for illicit trading of shares in his holding companies. Around the same period, SQM was implicated in a case related to unlawful financing of political parties.
Earlier this year, Ponce Lerou appointed his children Francisca, Alejandro-Augusto, and Daniela to the boards of directors of Pampa Calichera, Nitratos of Chile, Potassium of Chile, Norte Grande, and Oro Blanco. With this new board, the conglomerate will no longer be identified as Ponce Lerou’s company, but as the Ponce-Pinochets’.
The agreement released on Friday specifies that board members of the new venture cannot have served as directors of Codelco or SQM for more than a decade. This stipulation effectively bars Ponce Lerou from the lithium company.
