Chile weighs arbitration with top lithium producer Albemarle

Atacama salt flat, Chile. (Image courtesy of Ferrando | Flickr.)

VALPARAISO, Chile, Oct 4 (Reuters) – The Chilean state agency that oversees lithium mining in the country´s Atacama salt flat will decide within a week whether to take top producer Albemarle Corp to arbitration in a contract dispute, an attorney for the agency said on Wednesday.

Maria Elina Cruz, an attorney for Chile state development agency Corfo, said Albemarle has failed to reply to questions about a contract the agency signed with Albemarle in 2016. The agreement grants the U.S.-based miner coveted rights to extract lithium from the Salar, the world´s richest and most cost-efficient deposit of the ultralight battery metal.

In exchange, the contract with Corfo requires Albemarle to offer as much as 25 percent of its annual production capacity at a discounted rate to companies seeking to produce battery materials within Chile, a deal intended to spur a value-added lithium industry within the Andean nation.

But Cruz told the Senate´s Mining and Energy Committee that Albemarle had thus far failed to provide the agency with data it needs to set that discounted rate.

“I haven´t lost hope … that we can reach an agreement. Despite that, this week we have a meeting … in which we´ll decide whether or not to take this to the courts,” Cruz said.

Albemarle said it has been “negotiating and in contact with Corfo for the last several months and have made offers to specialized producers.”

“Albemarle has been and will continue to comply with all the aspects of the Contract with Corfo,” it said in a statement. “We will continue to engage in a dialogue based on good faith and the willingness to find points of agreement in this matter.”

Cruz said the dispute with Albemarle would not jeopardize its right to produce lithium from the Salar, but added that the impasse had unfairly slowed Chile’s efforts to develop a value-added lithium industry.

“Corfo is profoundly concerned about this,” Cruz said. “This is the heart of the agreement.”

In March, Corfo awarded contracts to Chile’s Molymet, China’s Sichuan Fulin Industrial Group and a joint venture between Samsung SDI Co Ltd and South Korea’s POSCO to produce battery components in Chile using discounted lithium from the Atacama, for a total investment of $754 million.

But Cruz said Albemarle had yet to make a “serious offer” to any of the companies that have been promised the lithium.

“This has been very evasive, and in my opinion, it´s inexplicable because the clause is quite clear,” she said, adding the company had not answered the agency´s phone calls on the issue for three months.

The reduced rate agreed upon in the contract must equal the lowest market price of lithium produced by the company and exported from Chile in the past six months, Cruz said.

The Atacama salt flat where Albemarle and Chilean competitor SQM operate produces more than one-third of the world´s lithium.

(Reporting by Dave Sherwood; Editing by Phil Berlowitz, Leslie Adler and Susan Thomas)

183 0

More Latin America News