SQM and Albemarle shares decline as Chile targets state control of lithium

SANTIAGO (Reuters) – Shares in Chile’s two largest lithium miners, SQM (SQMA.SN) and Albemarle Corp (ALB.N), fell on Friday after the Andean country, which has the world’s largest reserves of the metal, fell batteries. He unveiled plans to nationalize the sector over time.

The move would see Chile, the world’s second-largest lithium producer, shift to a model in which the country holds a controlling stake in all new lithium projects through a public company that will partner with private mining companies.

Chile’s bid for state control reflects a broader wave of lithium nationalism across Latin America, home to the so-called “Lithium Triangle,” which houses the world’s largest pool of the precious metal essential for electric car batteries.

It presents a new challenge for electric vehicle (EV) manufacturers who are scrambling to secure battery materials. Mexico nationalized lithium deposits last year, and Indonesia banned the export of nickel ore, a key material for batteries, in 2020.

Young, progressive Chilean President Gabriel Boric said late Thursday in his announcement that the country will not cancel existing contracts, though it will try to negotiate with mining companies to voluntarily switch to a public-private model.

Boric is set to give more details about his plans during a talk in the northern city of Antofagasta on Friday.

At midday, shares of Chilean US-listed SQM were down about 10%, while Albemarle was down more than 6%. Chile’s SQM lithium contract is due to expire in 2030 and Albemarle’s in 2043, giving it more insulating from potential movement.

SQM has a larger footprint in Chile, with 81,000 hectares (about 200,000 acres) for lithium extraction compared to Albemarle’s 16,000 hectares.

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SQM said in a statement that it “analyzes the strategy being implemented by the government.” Albemarle said it would have “no material impact on our business” and that it would continue talks about investing in further growth and the use of new technologies in Chile.

London mining stocks also fell sharply. Rio Tinto (RIO.L) fell as much as 5.7% at one point to its lowest in nearly a month, and was last down 4.7%.

Shares in rival Anglo American (AAL.L) fell 5.9% on the day, making the basic resources sector the worst performer in Europe.

In neighboring countries in the lithium triangle, which spans Chile, Argentina and Bolivia, governments are increasingly pushing for a greater public sector share in mining the metal and are seeking to develop a nascent battery sector.

Argentina’s state energy company YPF has gotten into the lithium business, while Bolivia has long maintained tight control over its vast though largely untapped resource. It recently submitted a lithium tender to a Chinese consortium that includes battery giant CATL.

Mexican President Andrés Manuel López Obrador and Bolivian President Luis Archie promoted the idea of ​​a regional “OPEC” on lithium to coordinate lithium policy and benefit local economies.

(Reporting by Alexander Villegas and Ernst Scheider); Written by Adam Jordan. Editing by Jean Harvey

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