BYD wins Chile lithium extraction contract
15 January 2022
Chile’s Ministry of Mining awarded China-based BYD a contract to extract up to 80,000 tons of metallic lithium. BYD won the contract—one of two awarded by the Ministry—with an offer of $61 million.
The other lithium extraction contract, also for 80,000 tons, went to Chile-based Servicios y Operaciones Mineras del Norte SA, for an offer of US$60 million. The Ministry said that those two offers were substantially higher than the rest of the offers received. Among the losing bidders were Albemarle, which produces 19% of global lithium, and Chile’s SQM (17%).
The special operating contracts awarded do not specify the geographic location. The two winners can now explore, study and develop a lithium project over the course of seven years, with a possible two-year extension. They will then have 20 years to produce the set amount of lithium.
The allocated quotas, for a total of 160,000 LME tons, represent about 1.74% of the known lithium reserves in Chile (9.2 million tons, according to the US Geological Survey (USGS).
BYD always had a global and sustainable view of technological development, aiming to expand our business worldwide. Chile has become the best example of adaptation and vision for the future, demonstrating that its stability and commitment to innovation have positioned it as a leader in Latin America. BYD has been part of these processes, focusing on innovation and bringing to Chile the technology that will help build a sustainable ecosystem in the country. We started with electromobility, and today we will add value to lithium extraction and production.—Stella Li, Executive Vice President of BYD and President of BYD North America
A goal of the national and international call was to increase the production of lithium in Chile to meet the growing global demand from electromobility. This, in a context in which, despite having the world’s largest lithium reserves, Chile has been losing market share due to the absence of new projects, the Ministry said.
Until 2016, Chile was the world’s largest producer of lithium, with 37% of the market. The share has dropped to 31%, as the country has been overtaken by Australia. If Chile fails to increase production, by 2030 it will have fallen to 17%.
One of the goals of Chile’s 2050 National Mining Policy is to increase production to 380,000 tons of lithium carbonate by 2030.
Prior to the start of the exploration and production, the companies must obtain from the pertinent authorities—environmental and others—all the required permits, as well as generate the necessary spaces for dialogue to ensure that the projects are developed in harmony with the local communities, caring for the environment and respecting current legislation.
The Chilean Government will work with the winning companies to devise formulas that allow allocating a portion of the payments that they must make, to contributions to local communities and investments in R & D.
The Government also reaffirmed its willingness to form a National Lithium Board to develop a development strategy for the industry.