The municipalities of Antofagasta, San Pedro de Atacama and Maria Elena have signed contracts setting out the terms of the funds handed over each year by the SQM until the expiry of the contract with Corfo at Salar de Atacama in 2030. In addition, the SQM is to provide $14 million to promote sustainable development and investment projects in the communities of Salar de Atacama, duly registered with CONADI. A contribution of $10.8 million is also being requested for the Antofagasta Centre for Clean Technology (R-D). Promised contributions are currently being deferred until the formalities of the agreement are completed. The royalties are in line with the agreement between Corfo and Albemarle in 2017, with a slippery scale of up to 40% of the value of FOB sales if > is $10,000/t. Corfo said the licensing agreement and related payments could generate an additional $8.3 billion for regional and regional governments by 2030. The approval of 25% of SQM`s additional production to be made available to Chilean consumers, combined with an identical clause in the 2017 Corfo-Albemarle agreement, is expected to accelerate investment and development of a downstream lithium industry in Chile and bring other benefits, particularly to the Antofagasta region. Roskill View: The renewal of the SQM license and the approval of the extension were somewhat inevitable, given what Chile could potentially lose, but it was clearly catalyzed by the recent change of government. The extension of quotas allows the SQM: to triple production at Salar de Atacama to 216,000tpy LCE against 60,000tpy LCE, which, with the expected capacity increases in the Albemarle operation in the Atacama and Corfo plans to develop the Maricunga and Pedernales Salars, could make Chile the largest producer of lithium.
It is possible that the Corfo-SQM agreement could open up Chile`s lithium sector after years of obstruction, and Corfo is already pushing Chile to dominate the market in the future. Roskill expects SQM to increase its capacity in Chile, with its investments in Argentina in Cauchari and in Australia, Mt Holland, with the aim of maintaining a 25% market share. This would mean that the maximum capacity would be reached by the mid-2020s. After a limited supply of lithium connections, there is no doubt that SQM customers will breathe more easily, with strong demand growth in the years to come. The agreement is less optimistic for SQM`s current and potential competitors, who will now see a more competitive market. These agreements set contributions as a percentage of SQM`s turnover, in particular 0.2% in San Pedro de Atacama and 0.1% in Antofagasta and Maria Elena. This year, this figure represents $1,545,494 for San Pedro de Atacama and $772,747 for the other two municipalities. The dispute had threatened to complicate Nutrien Ltd`s offer to sell its stake in SQM. The fertilizer group, created earlier this year by the merger of Saskatchewan`s Canadian Potash Corp. and Agrium, is to sell its stake in Chilean lithium miner as part of an agreement with Indian supervisory authorities. “The quantities remain the same as those authorized by the Environmental Protection Agency,” the company replied. Until the new agreement, all lithium was not processed from brine because it would have exceeded the lithium quota, Corfo added.
In 2018, SQM and Corfo have updated their lease in Atacama. This has made lithium extraction a fivefold increase. When asked about Di`logo Chino, Corfo said that this does not mean that they extract more brine from salt levels.