An Update On The New Lithium Strategy: Unlocking New Opportunities For Private Companies

Urzua Abogados


Urzua Abogados is a niche law firm, based in Santiago, Chile, that specializes in Mining (including services and technologies for the mining industry), Engineering, Construction, and Project Development, and within it, its controversies (arbitration, litigation and claims).
The Government of Chile recently released an updated version of the National Lithium Strategy ("NLE"), which is poised to reshape the country's lithium industry.
Chile Corporate/Commercial Law
To print this article, all you need is to be registered or login on


The Government of Chile recently released an updated version of the National Lithium Strategy ("NLE"), which is poised to reshape the country's lithium industry. The NLE was first announced just two months ago (an article about the key ideas of the original announcement can be found here). This article provides a summary of the key points covered in the updated NLE and highlights the opportunities it presents for private companies operating in the lithium sector.

Executive Summary

The updated NLE emphasizes the crucial role of private companies throughout the lithium value chain and clarifies that the state will only exert control in select cases of public-private partnerships. It also outlines the tender process for special lithium operation contracts and their starting date, and underscores the aim of promoting technological advancements and value addition in the lithium industry.

Key Ideas and Novelties in the Updated NLE

  1. Public-Private Partnership: The updated NLE emphasizes that the private sector will be a strategic partner in the development of the lithium industry. Contrary to earlier reports of nationalization by some media outlets, the NLE does not imply the takeover of lithium companies. Private companies' involvement is recognized and emphasized throughout the document.
  2. Scope of Public-Private Partnership: Private companies will play a significant role in sustainable exploration, exploitation, and value addition projects. The NLE promotes technology development across the entire lithium value chain.
  3. Structures of Public-Private Partnerships for Salt Flat Exploration and Exploitation: The NLE will allow for diverse mechanisms to select private partners based on the specific characteristics of each salt flat, the type of activity (exploration or exploitation), and the presence of existing incumbents. Joint ventures will be the primary form of association between the state and private companies.
  4. Diversification of Actors: The NLE stresses the importance of diversifying actors within the lithium industry to stimulate a more competitive market. With 63 saline environments identified, each with unique characteristics, tailored knowledge and productive developments are essential for effective lithium exploitation. This is a hint that the government will welcome companies of all sizes and capabilities that offer disruptive processes, methods, and technologies.
  5. Control by Private Companies in Non-Strategic Salt Flats: The updated NLE clarifies that private companies may have control and majority participation in public-private associations for lithium exploitation in non-strategic salt.
  6. Promotion of Technological Developments and Value Addition: The State will actively promote and, in certain cases, provide financial support for the advancement of lithium-related technologies and knowledge. This support will encompass both upstream activities, such as exploration and extraction methods, and downstream processes, including refining techniques and the production of battery precursor elements. The government acknowledges the global nature of the lithium value chain, ensuring that unrealistic requirements, such as mandating lithium producers to manufacture batteries or engage in economically unfeasible activities, will not impede their operations.
  7. Recognition of Pre-1979 Concession Holders: The NLE recognizes the rights of concession holders granted prior to 1979 to exploit lithium without requiring a special lithium exploration contract ("CEOL"). However, the document only mentions concessions held by Codelco in the Pedernales and Corfo in the Atacama salt flats, omitting other potential concessionaires. This omission may be due to potential disputes over specific terms in the ongoing negotiations between Codelco and companies holding concessions in the salt flat of Maricunga.
  8. Tenders for Special Lithium Operation Contracts: Private companies or public-private joint ventures without pre-1979 concessions require a CEOL, that as per the updated NLE it should be obtained through a competitive and transparent tender process. Technical offers must include information updates, local value generation plans, productive chain proposals, and estimates of associated environmental impacts. The tender process for exploration CEOLs will begin in the first half of 2024.
  9. Institutional Framework: The updated NLE emphasizes the need for a new institutional framework for lithium and salt flats. The state plans to establish dialogue and participation with stakeholders, including communities, civil society, and private companies. However, the current lithium regulation has not been amended. Implementing the NLE requires agreements and approvals from various actors, including lithium producers and Congress. The government lacks the necessary majority in Congress to pass the reforms required for NLE implementation.
  10. Extraction Technologies: The updated NLE highlights the importance of new extraction technologies, particularly direct extraction with brine reinjection. Although these technologies are being tested and not yet fully implemented at an industrial scale, the NLE recognizes their potential and proposes making them mandatory for existing and future operations. However, an amendment to the law is needed for full enforcement. It can be inferred from the NLE that the mandatory use of these technologies will be implemented gradually to allow for industrial-scale application. The NLE also commits to supporting the development and testing of these technologies to attract companies offering advancements in this area.
  11. Existing Lithium Operations in the Salt Flat of Atacama: Currently, only two companies, SQM and Albemarle, are involved in lithium extraction in Chile, and both in the Atacama Salt Flat. The updated NLE does not provide significant additional information on this matter. The state is actively negotiating with these companies, particularly SQM, whose contract ends in 2030 (compared to Albemarle's contract, which ends in 2043). Any modifications to the contracts will be made in agreement with the companies. Through a subsidiary of Codelco, the state aims to establish an association where it will have control before the expiration of these companies' contracts. However, the outcome is uncertain if the association is not agreed upon before the current government's term ends in March 2026.

Matters that still require clarification

  1. Companies Holding Mining Concessions in Salt Flats: The NLE is vague regarding companies holding mining concessions in areas with lithium deposits. These companies cannot be forced to share their property with the State. The granting of CEOLs to these companies is uncertain, but those with mining concessions, exploration efforts, financial and technical resources, and collaboration agreements with communities should be considered likely candidates. The updated NLE recognizes the opportunity that Chile cannot miss; therefore, we could infer that companies with advanced exploration and assessments of environmental and community impacts are excellent candidates for CEOLs.
  2. Mechanisms for State Control in Strategic Salt Flats: The updated NLE mentions state control over public-private associations in strategic salt flats but does not explicitly state that the state must hold a majority participation (except in a couple of paragraphs that may be based on the original announcement). State control can be achieved through special contract clauses or shareholders' agreements, as mentioned by the Ministry of Finance, Mario Marcel in an interview that he gave last April.
  3. Determining Strategic Salt Flats: The updated NLE does not clarify when a salt flat will be considered strategic. However, it uses the example of the Atacama Salt Flat, which holds the largest lithium reserve in Chile, accounting for over 90% of the total. It is reasonable to assume that most salt flats will not be designated as strategic, allowing private companies to maintain control over their associations with the state.
  4. Lithium Deposits Outside Salt Flats: The NLE does not address lithium deposits found outside salt flats, specifically those in pegmatite reserves. The focus on salt flats in the NLE is likely due to their abundant lithium reserves in the country. Companies with mining concessions containing lithium in pegmatite reserves would need to request a CEOL. The state's stance on whether an association will be required for these cases is yet to be determined.

Next Steps

The implementation of the NLE will require agreements and approvals from various actors, including Congress. Furthermore, the Government may even need to negotiate and reach agreements with the controlling majority of the newly elected Constitutional Assembly. The government's openness to dialogue show so far should translate into concrete actions that attract private investment, allowing Chile, the country with the largest lithium reserves, to reclaim its position as the world's leading lithium producer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More