SANTIAGO (Reuters) - Chile's economic development agency CORFO on Wednesday said it reached an agreement with Albemarle (NYSE:ALB) to establish an option for the U.S. company to increase its production quota by 240,000 metric tons of lithium metal equivalent (LME).
The increase would raise Albermarle's production quota by close to 50%, from about 460,000 metric tons of LME currently.
To access the higher quota, Albemarle would need to prove its ability to use sustainable technology such as direct lithium extraction, consult local indigenous communities, and obtain environmental permits, CORFO said.
The agreement is part of a settlement reached in April that calls for Albemarle to pay $15 million to resolve a complaint made by CORFO in 2021 with the International Chamber of Commerce (ICC), in which it argued the company had underpaid commissions to the state.
Albemarle is one of two companies producing lithium in Chile, which is the world's second-largest producer of the white metal used in EV batteries.
"This establishes a series of clauses that let us anticipate production with higher sustainability standards in the Salar de Atacama," CORFO Vice President Jose Miguel Benavente said in a statement, referring to the lithium-rich salt flat where Albemarle operates.
The pact also outlines new terms for setting a "preferential price" for producers of lithium products in Chile. CORFO said the changes were aimed at helping those companies "come to an agreement with Albemarle in a better way and with greater flexibility for a long-term supply of lithium carbonate."
Other terms from a 2016 agreement with Albemarle remain unchanged, CORFO said, including the deal's validity through 2043 and the option to purchase assets in the Salar de Atacama.