Junior miner CleanTech dismisses fears of Chilean lithium nationalization
Junior miner CleanTech Lithium was not worried by the surprise announcement by Chilean state president Gabriel Boric last week that appeared to indicate an intention to nationalize the lithium industry in the South American country
“We aren’t afraid [of the reports of lithium industry nationalization] because we know that we can produce lithium in a very clean way and work with the government,” Gordon Stein, CleanTech Lithium’s chief financial officer, told Fastmarkets at the Mines & Money Connect Conference in London on Tuesday, April 25.
Jersey-based CleanTech is in a development and exploration phase at three lithium projects in Chile on which it holds licenses. The company hopes to start commercial production in 2026.
Boric’s announcement on Friday last week sparked concern among stakeholders, because he said that the government was planning to gradually increase state control over the lithium industry.
But a government document published early this week clarified that. “The development of the lithium industry will be led by the state and will involve the private sector along all the value chain,” it said. “It will be a public-private collaboration. A national lithium company will be created to coordinate future public-private action.”
This would be achieved by negotiations with incumbent lithium producers Albemarle and Sociedad Quimica y Minera (SQM), the establishment of public-private partnerships, negotiations with political opposition, and the establishment of a state-owned lithium company.
Mined lithium in Chile made up about 30% of the global supply in 2022, a volume second only to Australia’s, according to the US Geological Survey. It also has the world’s largest known reserves of lithium, at 9.3 million tonnes, also according to the USGS.
The goal of further state involvement was intended to ensure that Chile could continue to expand its lithium production in a sustainable manner and support the local economy, Boric said.
CleanTech defends high ESG standards
Speaking on the sidelines of this week’s Mines & Money Connect conference, CleanTech’s Stein argued that his company’s community engagement and high environmental standards would continue to be key in the further development of its projects.
“We have a strong governance side, and we engage with ancestral communities to ensure that we have the ‘social license’ to operate,” Stein said.
He also hailed the company’s use of direct lithium extraction (DLE) technology, a pioneering method for sustainable lithium extraction. This would allow CleanTech to produce material efficiently and without significant negative environmental consequences, such as excessive use of water and fossil fuels.
Regarding the Chilean government’s announcement, Stein clarified his belief that there would continue to be a role for private entities in the country’s lithium production sector.
“Where the smaller companies will have a role is in persuading the EU and Western companies to buy their material,” Stein said. “And there will need to be more transparency in the supply chain and [environmental and social governance] space.
CleanTech also noted that, following Boric’s announcement, its board had been given reassurances that its assets will not become subject to majority state participation, and that the focus of majority state control was intended to apply to assets considered to be of strategic importance to the country.
CleanTech had spoken to the Chilean government since Boric’s announcement on April 21, and had sought legal advice in the country, and was content that it would be able to retain control over its projects.
“The focus of the strategy outlined by the government is on partnership rather than nationalization,” CleanTech said.
“Junior minors have to be optimists,” lithium expert Joe Lowry, host of the Global Lithium LLC Podcast, said. “There is still a lot of uncertainty. Just because resources aren’t deemed strategic doesn’t mean there will be no state ownership – it just doesn’t have to be a majority.”
The importance of collaboration was echoed by Wilfedo Reyes, founder and chief executive officer of the Critical Minerals Association USA, which is affiliated with similar CMA groups in other jurisdictions. CMA USA hopes to foster improved critical mineral supply movements between North and South America, he said.
Talking to Fastmarkets, he said that producers must consider the effects of their production operations on local communities.
“Look at the places where mining is being done, and look at the effects on the locality,” he said, pointing out that some previous projects have not given enough consideration to the local environment, and had a destructive effect.
“Collaboration is key,” he said, “between public, private, and non-governmental organizations.”
From the perspective of the Chilean authorities, he said: “When you’re running a country, it’s okay for a private company to come in, but they have to consider the consequences of their activities on the local community.”
Lithium producers reassure investors over Chile operations
Other lithium producers have also sought to reassure investors that their operations in Chile are secure, including Albemarle.
“[Albemarle’s] current mine is secure until 2043. We see this as an opportunity to participate with the Chilean government to get additional lithium within the country,” Albemarle chief executive officer Kent Masters said last week.
US-based Albemarle has operations in the Salar de Atacama as well as a conversion plant in La Negra, near Antofagasta. Its brine operations in Atacama accounted for around 29% of its lithium metal production in 2022.
Stein also expressed confidence that the current situation was an opportunity for companies to continue to produce through their licensed period, and that Chilean authorities intended to encourage them to apply for license extensions earlier rather than later.
In his initial announcement, Boric confirmed that the plan would respect the lease agreements in place with lithium producers in the country. Albemarle and SQM have already had preliminary meetings with state development office Corfo to discuss the government’s proposal.
Stability was identified by delegates at the Mines & Money conference as a major concern, with one panellist saying that any move toward nationalization could undermine the perceived stability, and thus the appeal, of Chilean lithium production projects.
Indeed, speaking to Fastmarkets, one financier, with investments in a number of lithium projects outside Chile, said that he would not invest in any location where there was significant uncertainty. “We’ve tended to avoid jurisdictions where there’s a question of instability [or nationalization],” he said.
Chinese lithium prices rebound
Chinese lithium spot prices rebounded in the week to Thursday, April 27 on improved sentiment, having been on a downtrend since the end of November last year. Spot market activity also increased, with many traders ‘bottom-hunting,’ sources said. In the past, the most liquid lithium spot market has driven sentiment in global prices.
Fastmarkets’ price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range, exw domestic China, was 170,000-195,000 yuan ($24,513-28,118) per tonne on April 27, up by 15,000-20,000 yuan per tonne from 150,000-180,000 yuan per tonne a week earlier.
“The strength in [Chinese prices] hasn’t filtered through to the East Asian market,” a Chinese lithium trader said. “It usually takes time for the East Asian market to react to changes in the Chinese market. I think it will be clearer where East Asian lithium prices will go after the Chinese Labor Day holiday, April 30 to May 3.”
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