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Latino Daily News

Saturday September 15, 2012

Chile Receives 3 Bids to Develop Lithium Reserves

Chile Receives 3 Bids to Develop Lithium Reserves

Photo: Lithium in Chile

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Chile’s government said Friday that three companies have submitted bids to develop lithium reserves in the country’s northern region.

One of the bidders was Posco Consortium, made up of South Korean firms Posco and Daewoo International Corporation, Japan’s Mitsui and Santiago-based Li3 Energy.

The other two were the Chilean firms Sociedad Legal Minera NX UNO de Peine, controlled by Grupo Errazuriz; and Sociedad Quimica y Minera de Chile.

SQM is the world’s leading lithium producer and one of only two companies - along with Rockwood Holdings - that mine lithium in the Andean nation, the world’s largest producer of the metal.

“We’ve steadily reached each goal we’ve set for ourselves in opening the lithium market. In the coming days, we’ll know the winner of the CEOL (Special Lithium Operation Contract),” Deputy Mining Secretary Pablo Wagner said at a press conference.

That winner “will help us inject more competition and innovation into this sector. This is a unique moment for Chile. It’s an opportunity we can’t miss,” he said.

A total of 66 companies had acquired the auction conditions, Wagner said, adding that the three bidders met the government’s requirements.

“All of the companies were rated and positively evaluated. The only decision in awarding (the contract) is the best economic offer,” the deputy secretary said.

The economic characteristics of each bid and the winner of the concession will be unveiled on Sept. 24.

The winner of the bid process will sign a 20-year CEOL with the government covering exploration and production of that mineral in Chile’s Atacama Desert.

President Sebastian PiƱera’s conservative administration opted for that type of contract because, although Chile’s 1973 Mining Code defines lithium as a “strategic” mineral for which regular mining concessions cannot be awarded, the country’s constitution allows special contracts to be signed to exploit those reserves.

Through the CEOLs, the government plans to collect $350 million per project via a 7 percent sales royalty.

Chile’s opposition and experts have questioned the government’s move to open lithium mining to foreign investment, saying it is a resource that should be developed by the state.

Global demand for lithium - a key component in batteries for mobile devices and electric/hybrid vehicles - has tripled over the past 10 years, while Chile’s Cochilco state copper commission says the price of lithium carbonate on world markets has risen from $2,000 per ton in 2001 to around $6,000 per ton at present.

Chile holds the planet’s second-largest lithium reserves, trailing only neighboring Bolivia.