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Chile Moves to Nationalise Lithium Production

24 April 2023 16:42

The battery metal market is in for another shock as the second largest global lithium producer Chile announced it will be moving forward with plans to nationalise its lithium production.

The announcement comes from the country’s President Gabriel Boric, who said the move will help both protect Chile’s environment and boost its economy by transferring control of industry giants SQM and Albermarles lithium operations to a separate state-owned company.

With Chile hosting the world’s largest lithium resource, its move to protect its natural resource is already sending shockwaves throughout the burgeoning lithium market as it could potentially result in another squeeze on the market as the ever-growing EV industry fights to secure supply of the critical metal.

A report from the International Energy Agency in July last year stated that demand for the EV industry could constitute up to 80 per cent of lithium demand in 2030, with lithium demand in 2030 outpacing 2021 lithium production fourfold.

With Chile moving to protect this rich resource, EV and green technology companies will have to widen their gaze to secure critical supplies, with analysts telling Reuters “The move is likely to spur a shift in future investment in lithium to other countries including Australia”.

Australia already leads in the world production of lithium, and this move from Chile could extend its lead even further with the country already being home to a number of hugely successful lithium projects with more on the way.

Most of Australia’s lithium resources lie within Western Australia, with the state being home to the world’s largest lithium producer Greenbushes alongside the developing Pilgangoora, Mount Cattlin, Early Grey, Mount Marion and Bald Hill deposits.

Albermarle has already shown it has eyes on Western Australia, with the Company recently making its third-take-over bid for Australian-lithium giant Liontown Resources for its flagship 156Mt @ 1.4% Li2O Kathleen Valley Lithium Project and expanded portfolio.

Liontown rejected the offer on the basis that the proposal undervalued Liontown and the long-term outlook for lithium producers, and it appears that investors agreed, with the takeover attempt seeing LTR’s share price soaring 65.57 per cent to the highest trading price the explorer has seen.

With Albermarle eying WA, it wouldn’t be a stretch to say that a number of international investors, mining companies and EV manufacturers also have their eyes on the wildflower state and its rich mining pedigree, making room at the table for smaller lithium players as well.

Evergreen Lithium (ASX: EG1) is now hard at work on its battery of strong lithium portfolio following its blockbuster IPO $7Million IPO and subsequent 60 per cent share price jump, with all eyes on the explorers Byone project which is believed to host strike extensions of Core Lithium’s newly upgrade 30.6Mt@ 1.31% Li2O Finnis deposit, with hits up to 107m @ 1.70% Li 20 logged within 1km of Bynoe.

Also setting up shop in WA is Oar Resources, whose Denchi Lithium Project in WA’s Northern goldfields is located a stone’s throw away from Kathleen Valley, with the Company now closing in on a number of Lithium-Caesium-tantalum pegmatite targets having just expanded the Project’s territory with five additional tenements in January.

With lithium already expected to rise 88.27 per cent to trade at 334192.50 CNY/T by the end of the quarter, it will be interesting to see what effect Chile’s shocking move will have on lithium investment in the coming months.

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