SQM and Albemarle shares decline as Chile targets state management of lithium

SANTIAGO (Reuters) – Shares in Chile’s two largest lithium miners, SQM (SQMA.SN) and Albemarle Corp (ALB.N), fell on Friday after the Andean nation, which has the world’s largest reserves of the steel, fell batteries. He unveiled plans to nationalize the sector over time.

The transfer would see Chile, the world’s second-largest lithium producer, shift to a mannequin by which the nation holds a controlling stake in all new lithium initiatives by a public firm that can accomplice with non-public mining firms.

Chile’s bid for state management displays a broader wave of lithium nationalism throughout Latin America, dwelling to the so-called “Lithium Triangle,” which homes the world’s largest pool of the valuable steel important for electrical automobile batteries.

It presents a brand new problem for electrical car (EV) producers who’re scrambling to safe battery supplies. Mexico nationalized lithium deposits final 12 months, and Indonesia banned the export of nickel ore, a key materials for batteries, in 2020.

Younger, progressive Chilean President Gabriel Boric mentioned late Thursday in his announcement that the nation is not going to cancel present contracts, although it should attempt to negotiate with mining firms to voluntarily change to a public-private mannequin.

Boric is ready to present extra particulars about his plans throughout a chat within the northern metropolis of Antofagasta on Friday.

At noon, shares of Chilean US-listed SQM had been down about 10%, whereas Albemarle was down greater than 6%. Chile’s SQM lithium contract is because of expire in 2030 and Albemarle’s in 2043, giving it extra insulating from potential motion.

SQM has a bigger footprint in Chile, with 81,000 hectares (about 200,000 acres) for lithium extraction in comparison with Albemarle’s 16,000 hectares.

SQM mentioned in a press release that it “analyzes the technique being carried out by the federal government.” Albemarle mentioned it could have “no materials influence on our enterprise” and that it could proceed talks about investing in additional development and using new applied sciences in Chile.

London mining shares additionally fell sharply. Rio Tinto (RIO.L) fell as a lot as 5.7% at one level to its lowest in almost a month, and was final down 4.7%.

Shares in rival Anglo American (AAL.L) fell 5.9% on the day, making the fundamental sources sector the worst performer in Europe.

In neighboring international locations within the lithium triangle, which spans Chile, Argentina and Bolivia, governments are more and more pushing for a better public sector share in mining the steel and are looking for to develop a nascent battery sector.

Argentina’s state power firm YPF has gotten into the lithium enterprise, whereas Bolivia has lengthy maintained tight management over its huge although largely untapped useful resource. It just lately submitted a lithium tender to a Chinese language consortium that features battery large CATL.

Mexican President Andrés Manuel López Obrador and Bolivian President Luis Archie promoted the concept of ​​a regional “OPEC” on lithium to coordinate lithium coverage and profit native economies.

(Reporting by Alexander Villegas and Ernst Scheider); Written by Adam Jordan. Enhancing by Jean Harvey

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