Codelco and SQM Approve New Lithium Joint Venture Contract
The boards of Codelco and SQM have reviewed a comprehensive 600-page contract that outlines the creation of a new company formed from the merger of SQM Salar and Minera Tarar, a subsidiary of the state-owned mining company Codelco. This new entity will exploit lithium in the Salar de Atacama until 2060. The contract is expected to be signed on May 31, just before the Presidential Account where the issue will be prominently featured.
The agreement does not include any clause to exclude Julio Ponce's family from the corporate governance of the new company.
This contract signing marks the culmination of a process initiated on April 20, 2023, when President Boric announced a new National Lithium Strategy. This strategy aims to involve the Chilean State in lithium production in the Salar de Atacama, with Codelco leading the charge. Negotiations with SQM began in May 2023, and a Memorandum of Understanding (MoU) was signed on December 27, 2023.
Experts indicate that the contract establishes a majority state-owned company to develop lithium starting January 1, 2025. The project will proceed in two phases: the first from 2025 to 2030, and the second from 2031 to 2060, with an annual production increase of 100,000 tons.
Codelco sources stated that during the partnership's duration, the State will capture approximately 60% to 70% of the business margin through payments under contracts with Corfo and taxes. The remaining percentage will go to shareholders, including Codelco, who will make the investments and assume the risks. From 2031 to 2060, the State will retain 85% of the business income.
The contract includes a specific provision: it allows the new company to operate properties leased to Corfo in the Salar de Atacama to produce and sell lithium carbonate and lithium hydroxide. It also covers the production of intermediate products and other minerals such as potassium and iodine currently extracted from the salar. Any new business ventures must be approved by all shareholders.
From 2025 to 2030, the company's board will consist of six members, with the president appointed by Codelco and the general manager by SQM.
