Chile’s Chemical and Mining Society (SQM), the world’s largest lithium producer, has won a tender to develop a lithium concession in the country, which produces nearly 40% of the increasingly popular metal used as a key component in smartphones, hybrid cars and computer batteries.
Local newspaper El Mercurio reports the Chilean firm presented a $40.8 million offer for the 20-year concession, outbidding the $17.4 million bid from Korean-Japanese Posco Consortium, which includes Posco Ltd, Mitsui & Co Ltd, Daewoo International Corp and Minera Li Energu Spa.
SQM offer was also higher than its other main contender’s, the Sociedad Legal Minera NX UNO of Peine, majority owned by Chile’s Errazuriz Group, which offered $5.8 million.
In a last minute decision, State-own copper producer Codelco resolved not to be part of this lithium concession process. However, it recently said it is evaluating participation by some of its deposits.
Since Chile’s government announced in June its decision to privatize the country’s lithium, politicians, community leaders and even the local media have been immersed in a heated debate over who has the right to exploit the vast reserves of the so called “white gold” mineral the country has.
The most polemic point in this process has been the fact that SQM, today’s winner, belongs to Julio Ponce Lerou, son-in-law of dead dictator Augusto Pinochet, who ruled the country from 1973 to 1989. To make things worse, the brother of Chile’s Minister of Mines, Patricio de Solminihac, is the current executive vice president of SQM and most Chileans don’t believe he didn’t obtain any classified information from his brother, which would explain why the company presented the best offer by a wide margin, local analysts and politicians claim.
Large reserves
Chile, together with neighbours Bolivia and Argentina, own 85% of the world’s known lithium reserves. Almost a third of the commodity’s world production has been – until now – in the hands of two of the country’s State-owned companies.
According to America Economia, Chile alone owns 70% of the world’s lithium reserves. From these, SQM was granted rights to mine up to 100,000 tonnes of lithium over a 20-year period, in exchange for royalties paid to Chile’s government equivalent to 7% of the total output.
Under Augusto Pinochet’s 1973-1990 military regime, lithium was considered a “strategic resource” due to its possible applications in the manufacturing of nuclear weapons and atomic energy. Now Chile’s rightist administration thinks it’s “a good idea” to change that policy and pitch the resource to potential investors, since no lithium concessions have been issued since 1982.
Jumping into the lithium wagon seems to be a smart choice for companies, says Robert Baylis, industrial minerals research manager at UK-based Roskill Information Services.
In a presentation given in January at the 4th Lithium Supply & Market Conference, he explained the market for the commodity is growing at a brisk pace and is dominated by only a handful of firms, including SQM, FMC, ROC, Canadian miner Talison Lithium and mining behemoth Rio Tinto.
Related:
Chile divided over lithium privatization >> >>
2 Comments
TRU Group Inc
Unfortunately
Cecilia Jamasmie has cast dispersions on this lithium exploitation award to SQM.
But the fact is that SQM has the superior capability with the track record and
expertise to make best use of the license. SQM also owns the properties on
secondary salars like Maricunga to support its bid. Unfortunately, the same cannot
be said for the other bidders who really need to build their credibility. The
award was justified and the decision the right one!
Edward
R Anderson
TRU
Group Inc Lithium Consultants
trugroup.com
MINING.com Editors
Dear Mr. Anderson,
First of all, thank you for your comment.
As a journalist, my mission is to report based on facts:
· — That SQM belongs to the son-in-law
of Pinochet is a fact.
· — That the current executive vice
president of SQM, Patricio de Solminihac, is the brother of Chile’s Minister of
Mines is another fact.
· — And that several politicians,
including members of the Parliament, have their own opinions and concerns re
the privatization of Chile’s lithium and the kind of information SQM might have
access to during the process is yet another fact, as you can easily see when
reading yesterday’s and today’s local reports, such as bit.ly/Sk2B4s, bit.ly/VAs9KS,
bit.ly/SgkvAO, etc.
Unfortunately I don’t have access to the
bids themselves, so I cannot comment on which one I think was the best, but I
think it would be interesting to read what other experts like you have to say
about this topic.
Regards,
Cecilia Jamasmie