① After months of negotiations, SQM, the world's second-largest lithium producer, reached a framework agreement with the Chilean state-owned company Chile National Copper Company (Codelco); ② SQM handed over a majority stake in its Chilean Atacama Salt Lake assets to Codelco in exchange for extending its business for another 30 years to 2060.
Financial Services Association, December 28 (Editor Liu Rui) On Wednesday local time, SQM, the world's second-largest lithium producer, issued a statement saying that after months of negotiations, the company reached a framework agreement with the Chilean state-owned company Chilean National Copper Company (Codelco). SQM handed over most of its shares in Chile's Atacama Salt Lake assets to Codelco in exchange for extending its business for another 30 years to 2060.
The agreement will result in new public-private partnerships and continue to advance production and investment in this salt lake. This is also a key step taken by the Chilean government to develop a new model for lithium mining business in the energy transition process.
After the news was announced, in the US stock market, SQM's stock price rose sharply in after-hours trading, up 6.6% as of press time.
The world's largest salt lake will be mainly controlled by the country
According to public information, Chile's Atacama Salt Lake is located in the province of Antofagasta in northern Chile. It is the largest salt lake production project in the world, and more than 90% of Chile's lithium resources are concentrated here.
In April of this year, the President of Chile announced a new model for developing the lithium industry. He mentioned that in the future, the country should hold a controlling interest in strategically important salt mine public-private cooperation projects, and requested that state-owned copper giant Codelco be responsible for the terms of negotiations on a case-by-case basis, including negotiations with two existing lithium producers, SQM and Albemarle Corp.
SQM's operating contract at Atacama will originally expire in 2030. Meanwhile, the two companies' new statement said that after months of negotiations, two negotiation teams led by SQM CEO Ricardo Ramos and Codelco Chairman Maximo Pacheco reached a preliminary agreement to develop Atacama Salt Lake in 2025-2060:
The new operating company, for which Codelco will hold the majority shares, will commence operations in January 2025. It will assume SQM's current contract until its original expiration date of December 2030, then transition to a new contract ending 2060. Codelco will share profits from the beginning, and from 2031, Codelco's commission share will increase to 50.01%.
Although the agreement clearly benefits Codelco, considering that SQM's current contract expires in 2030, the agreement is expected to help extend its business until 2060, and SQM investors can also get some relief from it. The company's stock price has already fallen by more than 20% this year.
The agreement also means that the Chilean government has successfully explored a new public-private partnership model in lithium resource development, and is expected to provide a model for other salt lakes to establish similar public-private partnerships.