Mercuria eyes equity in African assets, new metals boss says
“You will see us very present in Africa and putting our money where our mouth is in respect of the Copperbelt,” Kostas Bintas said.
Chilean President Gabriel Boric, seeking to expand the country’s long-stalled lithium industry, has tasked state-owned Codelco, the world’s largest copper producer, to lead the charge of developing the white metal needed for electric vehicle batteries.
Chile is already the world’s No. 2 producer of lithium after Australia. But demand is exploding worldwide as automakers gear up to churn out electric vehicles to cut greenhouse gas emissions. The country sits on top of the world’s largest known deposits of lithium and Boric’s announcement in April gave Codelco responsibility for negotiating deals with new companies as well as current lithium miners Albemarle and SQM.
The goal is to get the companies to enter voluntary state-controlled partnership before their existing contracts expire. At the same time, Codelco wants to boost its output of copper which has slumped to its lowest in a quarter-century.
Some analysts have questioned whether the copper company with no experience as a lithium miner can tackle both challenges at once. But industry insiders told Reuters Codelco will probably focus its own resources on copper while negotiating contracts for lithium operations and letting other miners do the work.
“It could be Codelco only contributes capital,” said one of the sources with knowledge of executive decision making, a strategy which could see the state firm hold a majority stake in future projects but leave operations to private partners.
Chile could end up recreating the model Indonesia used with Freeport-McMoRan, where the firm gave up majority control to the state but remained the operator, a former Codelco senior executive said.
“Codelco can resolve the lithium issue with relatively few people,” added the person, who asked not to be named due to the sensitivity of the ongoing talks. “Codelco may have 51% but I don’t think it will be the operator.”
Lithium, evaporated from brine ponds in Chile’s high-altitude salt flats, is coveted by Tesla, BMW and every other global car maker. It is also sought by governments from Berlin to Beijing, that need it to power the shift to renewable energy.
Two Codelco sources with knowledge of resource planning and strategy said the lithium units were being run by compact teams and there was no plan for major hiring as talks with SQM and Albemarle moved forward.
The sources said the lithium strategy was being led by executives including Jaime San Martin, manager of new business development, known by some within Codelco as “lithium man”. Finance VP Alejandro Rivera is also closely involved.
Codelco Chairman Maximo Pacheco told Reuters that while the firm had set up two lithium subsidiaries Salares de Chile and Minera Tarar, it would first see how talks went before making any recruitment drives.
“Based on that and the progress of the negotiations we’re having to build these public-private alliances, we’re going to define the organization of human and capital resources,” he said on the sidelines of an event near capital Santiago.
Codelco has already started talks with SQM, whose existing lithium contract expires in 2030. Albemarle has said it is waiting to begin negotiations until closer to its contract’s expiration date in 2043.
Pacheco and other executives said lithium plans would not weigh on copper, but outside experts were skeptical.
Juan Carlos Guajardo, head of consultancy Plusmining, said building up Codelco’s lithium expertise from almost zero would nonetheless take up resources.
“The agreements will require high involvement of top management as they are strategic decisions,” Guajardo said. “But I think lithium is an excellent opportunity for Codelco to help them navigate their very difficult copper situation.”
Codelco must also revive production of the red metal that has flagged to a 25-year low. Challenges keep mounting as the Andre Sougarret, the company’s CEO, suddenly resigned last Tuesday, citing “complexities” within the company.
(By Fabian Andrés Cambero; Editing by Alexander Villegas, Adam Jourdan and David Gregorio)
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