Corfo Forecasts Substantial Lithium Revenue Growth for 2024-2030

Adjustment Period in Lithium Industry

The year 2023 marked a period of adjustment for the lithium industry, significantly different from the price boom of 2022. The value of a metric ton of lithium carbonate has witnessed an 84% drop since its historical peak, as detailed in a report by Corfo, the Chilean Economic Development Agency.

Corfo’s Long-term Revenue Projections

Corfo's executive vice-president, José Miguel Benavente, provided a detailed analysis of the lithium market and projected substantial income from leasing mining properties to companies like SQM and Albemarle. The projections, based on a conservative scenario, estimate lithium revenues of US$6.55 billion for 2024-2026 and reaching US$13.3 billion by 2030. This forecast is predicated on an average price per ton of lithium carbonate equivalent, with a long-term average price calculated at US$18,000 per ton.

Annual Revenue and Price Estimates

Corfo anticipates annual revenues for 2024 to 2030 under this conservative pricing model. For instance, the projected revenue for 2024 is US$1,062 million, with subsequent years like 2026, 2028, and 2030 seeing revenues of US$849 million, US$844 million, and US$867 million, respectively.

International Lithium Price Projections

International projections estimate a price of around US$20,000 per ton for lithium by 2030, emphasizing the conservative nature of Corfo's calculations. Corfo's planning involves using an average price projection of US$29,000 per ton of lithium carbonate equivalent for the rest of the decade, as of March 2023.

Structural vs. Extraordinary Income

Corfo distinguishes between "structural or permanent income" and "extraordinary income" in its financial planning. The corporation expects long-term income of US$850 million per year, which would be considered structural, with any amount above this figure classified as extraordinary income.

Discussion and Proposals Postponed

During a recent board meeting, Corfo presented its lithium market projections but postponed a decision on the proposals made by Benavente. The discussion is set to be revisited after the 2024 budget formulation, as suggested by the Treasury's Budget Director, Javiera Martínez.

Potential Uses of Lithium Resources

Benavente's presentation highlighted several potential uses for the lithium resources. These include financing public policy initiatives like the "Green Hydrogen Financial Facility" and contributing capital to a proposed Financing and Investment Agency for Development (AFIDE). Additionally, a special patrimonial account, "Corfo-DPS," is proposed to finance the long-term DPS Program, with an extra capitalization of US$1,000 million between 2024 and 2026, and further capitalization from extraordinary revenues until 2030.