Lithium Economics

Companies Seek New Lithium Opportunities in Chile

By Adam Page from Industrial Minerals

http://www.indmin.com/Lithium.html

Published: Friday, 30 January 2015

The Chilean government and lithium producers want to secure public-private partnerships as they seek to exploit the world’s largest lithium reserves. The move has brought optimism back to Chile’s mining sector. US-based Albemarle Corp. and Li3 Energy have welcomed the new opportunities being offered by the Chilean government to develop the country’s vast lithium reserves.

On Tuesday, Chile’s National Lithium Commission advised the government to develop public-private partnerships, which will allow the state to control the mineral while enabling companies to rent lithium-producing properties. "What the Commission did is to ratify the non-concessional character of lithium for old and new operations in Chile," Juan Carlos Zuleta, a lithium economist, told IM. "[This] implies the need for private companies producing and interested in producing lithium to continue to sign contracts with the Chilean State to produce lithium," Zuleta added.

Li3 and Albermarle have both expressed interest in working with the Chilean government. "We applaud the work of the Commission and look forward to working with the government to promote the development of new lithium projects in Chile," said Patrick Cussen, chairman of Li3. "This will allow us to continue moving forward with our flagship Maricunga project," Cussen added. Chile is looking for more value-added activities as new projects are developed in the lithium sector. However, this will not affect current exporting activities or existing contracts.

Albemarle also has a stake in Chile’s lithium after merging with US lithium producer Rockwood Holdings Inc. Its CEO, Luke Kissam, was in Chile earlier this month to meet with Chilean officials and mining stakeholders. "Going forward I think they will develop a state entity to manage the development to future lithium projects and they are looking for participants who are interested in doing that, with a track record in the industry which is very positive from a Albemarle and Rockwood standpoint," Kissam said during a conference call yesterday.

According to the US Geological Survey (USGS), Chile has more than 57% of the world’s lithium reserves and it is the second largest producer in the world. Albermarle Kissam says his company expects to be operating in Chile "forever." Albemarle now has access to Rockwood’s lithium carbonate sourced from the La Negra facility, based on natural brines from the Salar de Atacama, which Albemarle expects to be operating at until around 2030. Kissam said Albermarle want to shift work to higher-value applications away from technical grades. To achieve this it aims to increase its lithium carbonate capacity by mid-2015.

The company wants to look beyond developing the salars and getting involved in state research and development enterprises to help produce new uses for lithium. "We stand ready and able and we think we are in the best position to collaborate with them now, as well as in the long run allow us to be their preferred partner," Kissam said. Li3 Li3’s Maricunga lithium project covers approximately 1,888 ha (km²) in the northeast section of the Salar de Maricunga in Chile, the second largest salt flat in the country.

The company is in partnership with South Korea-based POSCO, for the development of a lithium direct extraction technology, which has so far achieved over 80% recovery of lithium carbonate in less than eight hours of processing Maricunga brine.

Last February, market intelligence SignumBOX, ranked the project as the 4th best undeveloped lithium project in the world out of the 37 brine projects. Last year, Li3 made the final payment for the Cocina 19-27 properties in the Maricunga Salar, adjacent to our existing Litio 1-6 properties that have an identified NI 43-101 compliant resource. Better luck this time?

The previous government under Sebastian Pinera tried to open up Chile’s lithium reserves in the Atacama Desert in 2012. In September 2012, a bid by Sociedad Quimica y Minera (SQM) was accepted, beating off competition from Li3 Energy and local juniors. However, it was declared void in October 2012 after it emerged that SQM had several lawsuits pending against the Chilean state.

On Monday, Pablo Wagner, the former deputy for the mining minister and his legal counsel, Jimena Bronfman, were indicted by a Chilean court accused of falsifying documents for SQM’s bid that failed to mention the lawsuits.

However, optimism and desire for growth is back in Chile’s lithium sector, a matter that President Michelle Bachelet included in her presidential manifesto. "We expect there will be interest from companies considering that now the rules of the game will be sufficiently clear and transparent," Zuleta told IM.

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