SQM faces fresh legal setback in Atacama lithium expansion

A Chilean court has upheld an environmental complaint by local indigenous communities against a major expansion by lithium producer SQM.

On December 26, the Antofagasta environmental court suspended approval for an expansion of SQM’s brine lithium production in the Atacama Desert, reversing a decision made in April 2019.

The court said it “took into consideration the fragile conditions of the Salar de Atacama from an ecosystem point of view, and the high level of scientific uncertainty regarding its hydrodynamic behavior, for its rejection [of the permit]”.

The objection was raised by indigenous communities in the Atacama, who stand to suffer from water shortages if the region’s freshwater resources are depleted.

The ruling leaves a question mark hanging over SQM’s planned $380 million investment to increase lithium production.

SQM currently produces 70,000 tonnes per year of lithium carbonate and 13,500 tpy of lithium hydroxide in the Atacama.

The investment planned to increase production to 120,000 tpy of lithium carbonate, and 30,000 tpy of lithium hydroxide, by the second half of 2021, and to 160,000 tpy of carbonate by the end of 2023.

SQM said it “regrets this decision,” and is “evaluating the next courses of action.” The company also said it has not yet made any adjustment to its production or sales plans as a result.

Lithium prices came under pressure in 2019 from oversupply and weak demand.

Fastmarkets’ weekly price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 45,000-51,000 yuan ($6,454-7,314) per tonne on January 2, compared with 75,00-83,000 yuan a year earlier.

All lithium carbonate, hydroxide and spodumene prices are available in Fastmarket’s Battery Raw Materials Market Tracker. Get a sample of the report here.