SANTIAGO (Reuters) - Chile's state development office Corfo said on Tuesday it met with U.S.-based miner Albemarle (NYSE:ALB) to discuss the South American country's plan to nationalize the lithium industry.
Chile's leftist President Gabriel Boric last week announced that control of the country's vast lithium operations would over time be transferred from Albemarle and SQM to a separate state-owned company.
The move shocked investors and foreign companies and raised concerns about the production and supply of lithium, a metal essential in electric vehicle batteries. Chile has the world's largest lithium reserves.
Albemarle's Chile manager, Ignacio Mehech, and Corfo Vice President Jose Miguel Benavente discussed the government's plan, which focuses primarily on the Atacama salt flat where Albemarle has a contract to operate until 2043, Corfo said in a statement.
Corfo will continue owning mining properties, while mining would be carried out by lease contracts that "gradually incorporate the state" through public-private alliances with a state majority, the statement said.
Benavente said the "public-private association and a possible extension beyond 2043" would be defined at a later date, but added that the agreement should benefit both parties.
In a separate statement released after the meeting, Mehech said Boric's statement about respecting contracts is an "unequivocal sign to the market that lets us maximize our commitment in Chile." He added that Albemarle, the world's largest producer of lithium, wants to grow in Chile and in the Atacama salt flat with new technologies.
"The new era of lithium is in total sync with the lithium strategy the government has outlined," Mehech said, adding that the company is looking to advance its direct lithium extraction technology, which is a key element of the government's plan.
Economy Minister Nicolas Grau told Reuters on Monday that the government will start official talks with both lithium operators through state-miner Codelco by the middle of this year and hopes to have an agreement before the end of Boric's term in 2026.
On Monday, SQM CEO Ricardo Ramos also met with Corfo and said the Chilean lithium company, the world's second-largest producer of the metal, would require $2 billion to enact the government's plans. SQM's contract expires in 2023.