Chile’s Codelco, the world’s top copper miner, has signed a non-binding agreement with foreign-backed miner Salar Blanco to develop a joint lithium project at the little-known Salar de Maricunga salt flat, in the country’s north.
The move, said the state-owned miner, is part of the country’s plan to launch a third local lithium operation amid favourable market conditions for the mineral, a key ingredient for batteries that power electric vehicles (EVs).
Salar Blanco, 50% owned by Australia’s Lithium Power International (ASX: LPI) with smaller stakes held by Canada’s Bearing Lithium (TSX-V: BRZ) and Chilean magnate Martín Borda, sued Codelco last year, alleging the copper giant was constitutionally barred from mining lithium.
The company withdrew the suit after the Chilean government granted it a permit to extract lithium from Maricunga, where it owns 18% of the mining rights at a 145 square kilometre site (90 square miles). The small size of the area, however, pushed it to seek out its neighbours, including Codelco, as partners.
Construction on the joint project is expected to begin in 2020 or early 2021, after all permits are obtained and the financial structure is finalized, Codelco said.
“The companies will negotiate the definitive terms of the association that allow them to carry out this initiative, combining the experience that both have in the area in order to maximize the value for Codelco and MSB,” the miner said.
The announcement comes a week after China’s Fulin Transportation Group ditched plans to build a lithium battery plant in the country’s north, shattering Chile’s hopes of jumpstarting its own domestic lithium battery industry instead of just exporting the raw material.
The South American nation 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.
The Maricunga salt flat is far smaller than the vast Salar de Atacama (less than 5% Atacama’s size), where top lithium producers US-based Albemarle and Chile’s SQM dominate.