China’s Fulin ditches plans for battery parts plant in Chile

Chile’s SQM expects to produce 60,000 tonnes of lithium this year, with sales volumes reaching between 45,000 and 50,000 tonnes. (Image courtesy of SQM.)

China’s Fulin Transportation Group has become the latest company to shatter Chile’s hopes of  jumpstarting its own lithium battery industry instead of just exporting the raw material, as it has abandoned a project to build a plant in the country’s north.

The decision, confirmed by the country’s development agency Corfo on Thursday, comes on the heels of a similar move by South Korea’s POSCO. The steelmaker said in June it was ending a joint venture with Samsung’s battery unit to build a similar facility in the country’s lithium-rich Atacama Desert.

Earlier this month, Chilean chemical company Molymet also scrapped its plans.

The three companies had won a tender opened by Corfo in April 2017 to attract battery makers to set up shop in the country. In exchange, the government committed to supply lithium for 27 years at a discount.

“We will continue our efforts of attracting companies willing to build facilities that add value to the lithium supply chain”

Chile’s Development Agency, CORFO

The agreements were based on an expected production increase by US-based Albemarle Corp, the world’s top lithium producer, which has a contract with Corfo to supply 25% of its Chilean production to companies designated by the government.

But Albermale’s plans to boost production have been delayed by technological and regulatory hurdles. The company also does not produce the type of processed lithium required by companies such as POSCO.

“We will continue our efforts of attracting companies willing to build facilities that add value to the lithium supply chain,” Corfo said in the statement.

A new auction, scheduled for early next year, will offer discounted lithium from Albemarle’s competitor SQM to companies willing to build battery plants in the country, the world’s No. 2 producer of the white metal.

Chile, also the top copper producer globally, contains more than half of the world’s most “economically extractable” lithium reserves, according to the US Geographical Survey (USGS). It is also the world’s lowest-cost producer, thanks to an efficient process and the country’s climate.

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