The European Union (EU) and Chile inked on Friday a fresh partnership deal that will give the bloc greater, easier access to lithium, copper and other raw materials that are key to the transition to renewable energy sources.
Chile, the world’s top copper producer and the second largest lithium miner, will drop tariffs on all imports from the EU, except sugar, and make it easier for European companies to invest in the country, the European Commission said.
The agreement means EU companies will be less hindered by Chile’s dual pricing system for domestic use or exports and potential export monopolies, while still allowing the South American country to promote domestic processing.
Chile will, in return, secure more favourable access for its exports, particularly food and professional services.
Currently, more than 60% of EU imports of the lithium used in batteries that power electric vehicles are from Chile.
Brussels considers the Latin American country as a vital strategic partner as it seeks to diversify resources imports away from China and pivot away from Russian gas.
The two partners would treat EU and Chilean investors the same as domestic investors in each other’s markets, including in energy and raw materials.
“Closer economic ties with Chile will allow the EU to diversify and strengthen its economic resilience, while increasing opportunities for EU exports and investments,” the commission said in the statement.
“Better access and sustainable investment in critical raw materials such as lithium will contribute to advancing our shared ambition for a green transition,” it noted.
The new agreement extends an existing trade deal between the parties from 2003, which has already liberalized commercial transactions in about 96% of product lines.
The pact, which includes sections on human rights, environmental protection and gender equality, is expected to enter force in 2024, following the approval from the European Parliament and EU governments.