Tomorrow Investor

Albemarle Set to Renew Chilean Contract Way Ahead of Schedule


A recent announcement on the part of the Chilean government regarding the nationalization of the lithium industry has prompted chemical processing company Albemarle Corporation to start renegotiating its lithium contract well before it expires in 2043.

In a statement made to the media on Thursday, May 4th, Albemarle CEO Kent Masters said that his company is open to renegotiating with its Chilean contracts and would also seek access to more of the country’s natural lithium reserves in hopes of augmenting the global supply of a vital material for electric vehicle batteries.

Masters explained that it’s unlikely that they would get a hard no should they opt to renegotiate before 2043. He also hinted that the Chilean government could even be involved as a partner moving forward.

Nationalizing an Industry

Last month, Chile’s President Gabriel Boric announced plans to gradually nationalize the lithium industry. This prompted Albemarle and fellow American lithium processing firm SQM to think of renewing their contracts ahead of schedule in light of fears that they could be asked to cease operations in Chile. 

The Chilean government, however, has given assurance that they will not prematurely terminate any contracts with foreign firms.

Currently,  Albemarle and SQM’s contracts only allow access to Chile’s salars, the Atacama salt flats. However, Boric expressed homes that other salars would be opened for more extensive lithium production. 

What Does Nationalization Mean for the Chilean Lithium Scene?

Boric’s plan will entail a shift from the open-pit and evaporation pond mining methods long used by the industry to draw lithium from the ground to more innovative direct lithium extraction (DLE) technologies deployed on a far wider scale. 

Interestingly enough, DLE has yet to be used in commercial operations and companies like Albemarle and SQM are still studying the application of such technologies to their work.

But there are valid reasons why DLE has yet to gain acceptance among large-scale lithium firms. DLE technologies are among the most resource-heavy in the industry, as they call for a great deal of potable water and electricity. While Albemarle is currently working to address these issues, it has yet to come up with a workable model.

In the event that Albemarle and its Chilean counterparts can actually get their take on DLE technologies to succeed, it is possible that they could become a dominant force in the global lithium industry as well as the EV manufacturing sector.

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