Lithium giants feud over competition, brine in Chile’s Atacama Desert

Lithium giants feud over competition, brine in Chile’s Atacama Desert

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Salt flats in South America
Enlarge / A basic view of Laguna Colorada positioned close to the border with Chile, within the Uyuni salt flats, Bolivia. The Uyuni salt flats are estimated to include 100 million tons of lithium, making it one of many largest international reserves of this mineral, based on state officers on the Bolivian Mining Company.

MARTIN BERNETTI/AFP/Getty Pictures

Two of the world’s largest lithium producers, Albemarle Company and Sociedad Quimica y Minera de Chile (in any other case often called SQM), are tangled in two disputes: the primary over water rights in Chile’s Atacama desert, and the second over possession of SQM.

Each Albemarle and and SQM have vital operations within the Atacama desert, the place among the world’s finest lithium assets exist. As electrical automobiles with lithium-ion batteries turn into extra well-liked, lithium assets have gotten extra invaluable. That has created some battle in an trade that has lengthy remained comparatively quiet.

Who’s consuming whom’s milkshake?

This week, Reuters reported that each Albemarle and SQM have accused one another of overdrawing brine from the Atacama’s underground aquifers. Each firms have operations within the Atacama’s Salar, and their operations are simply three miles aside from one another. The brine water that has been accumulating for millennia underneath the Atacama is lithium-rich, and corporations pump it out and ship the brine to evaporation ponds the place warmth extracts the water and leaves the reactive alkali steel behind.

Each firms have mentioned publicly that they anticipate to have sufficient brine to have the ability to produce lithium for many years, however Reuters discovered filings with the Chilean authorities that categorical doubt in regards to the longevity of the useful resource that Albemarle and SQM share.

In a number of filings, Albemarle requested that the Chilean authorities comply with up on a 2016 research that discovered that SQM had overdrawn from the brine reserve between 2013 and 2015. Chile’s environmental regulator says that as a result of adjustments that SQM has made over the past a number of years to the way it extracts brine, it is laborious to inform how a lot brine it has truly pumped.

SQM, for its half, additionally accuses Albemarle of overdrawing its share of brine in 2008 and between 2010 and 2012. Reuters studies that neither the Chilean authorities nor the businesses themselves appear to have a transparent understanding of how a lot brine exists for extraction.

The accusations appear to stem from a routine authorities inspection in 2013, when regulators discovered that the native Algarrobo timber on SQM’s property have been dying. That instructed that the timber, which ship roots into the Salar’s aquifers to outlive, weren’t getting sufficient water. “Two years later, extra timber have been dying however SQM didn’t notify authorities, based on authorities inspection studies,” Reuters famous.

In March, a Chilean authorities report discovered that extra brine was being extracted from the Salar than was coming again in by means of rainfall and snowmelt. Nevertheless, the workplace could not inform whether or not it was SQM or Albemarle that was withdrawing extra water. To take care of this, Chile’s water regulator is predicted to position restrictions on new water rights within the Salar.

An proprietor with two groups

The rivalry would not cease at water between Albemarle and SQM; it seems that the possession of the businesses can also be a supply of dispute.

The Wall Avenue Journal writes that Canadian mining firm Nutrien owns a 24 % stake in SQM, which it wish to promote to Chinese language agency Tianqi Lithium Corp. for $four.1 billion. However Tianqi companions with Albemarle to function a big lithium mine in Australia. This has left SQM shareholders anxious that Tianqi may share trade secrets and techniques with Albemarle.

Chile’s competitors regulator has accepted the deal, so long as Tianqi nominates administrators to SQM’s Board that aren’t direct workers, and so long as Tianqi-nominated administrators do not share any commercially delicate info. However SQM’s largest shareholder, Julio Ponce Lerou (who, the WSJ writes, can also be “the son-in-law of the late Chilean dictator Augusto Pinochet”), challenged Chile’s approval of the Nutrien-Tianqi deal in courtroom.

“Mr. Lerou has argued a Tianqi-SQM mixture might end result within the leaking of SQM commerce secrets and techniques to Tianqi accomplice and SQM rival Albemarle,” the WSJ writes. “Outdoors critics say the deal additionally might create an OPEC-like lithium cartel that may be capable to affect pricing and entry to the steel at a time when demand is hovering.”

A courtroom listening to is about for October 22, and the outcomes will decide whether or not the Nutrien-Tianqi deal will shut in 2018 or will stay in perpetual limbo.

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