Specialist
Director at Washington, DC-based think tank
Agenda
- Chile’s lithium nationalisation initiative overview, including key players impacted and potential outcomes
- Lithium protectionism and related mining jurisdiction risk across LATAM
- Alternative lithium producers in LATAM, including Argentina
Questions
1.
What are your views on Chilean President Gabriel Boric’s recent announcement of the intent to nationalise domestic lithium operations? What are your thoughts on the likely rationale for this, the mechanisms of execution and ultimately the likelihood of the implementation’s success?
2.
If all future lithium contracts are to be issued as public-private partnerships with ultimate state control, do you think that would still be attractive to private sector players? Alternatively, would that mark the end of FDI [foreign direct investment] into Chile’s lithium sector?
3.
You mentioned that, for strategic projects, there might be enforced state majority ownership. What do you think would define a strategic lithium project within Boric’s framework?
4.
You discussed that Boric is seeing pushback in congress. What seems to be the resistance from the government? What concessions do you think need to be made before we see more clarity on how the policy will develop?
5.
Do you think that ultimately the headline impacts of the original announcement of what Boric intended to do with the lithium industry will be successfully implemented? Might it have to be diluted or otherwise toned down to get the necessary support?
6.
The two private sector players that are impacted by the policy we’re discussing are Albemarle and SQM. What do you think are the biggest implications of Boric’s policy?
7.
Thinking about the dynamic you outlined, the offset there and the ultimate costs or potential risks to both Albemarle and SQM, and regarding how they might want to grow their presence in Chile, obviously we have uncertainty about the future, so the ultimate form of the policy, state participation and so on. Do you think growth will become more costly or risky for them within Chile?
8.
How hard do you think the Chilean government is willing to push against private sector operators, given fears of losing their technical expertise and the current cash streams that they bring in?
9.
How might any protectionism or nationalism around Chilean lithium impact customers that have supply agreements with either Albemarle or SQM? Would you imagine there’s any drive among those customer bases to source elsewhere as a result of these types of policies?
10.
You mentioned that Boric has said he’d like the companies that are currently operating – Albemarle and SQM – to be open to state participation before their existing contracts expire and the policies talked about take hold. What are the chances that Chile does anything that might be considered more protectionist or otherwise more hostile to either Albemarle and SQM, in terms of amending licences during the life of the licence or seizing assets within those leases before they expire? Do you think that would happen at all?
11.
If you don’t expect the Chilean government to take any hard hostile actions against Albemarle and SQM during the life of their existing leases, what about softer ways? Are there soft ways for it to force them into state participation or push them out, in terms of tightening policies that would otherwise indirectly impact the companies, push up their local cost base or anything such as that?
12.
You said you expect there’s a lot in the toolbox for the Chilean government to make life hard for Albemarle and SQM. What would you say are the top three items in that toolbox that could be used to make life difficult for them?
13.
If we did see Chile take a hard line regarding Albemarle and SQM and try to force or increase state participation before the existing leases expire, what recourse would Albemarle or SQM have? What protections or considerations would we need to be aware of that would stop Chile from claiming their existing assets?
14.
Do you think there are any lessons to take away from the historical nationalisation of Chile’s copper industry? Would that at all inform what we might see on the lithium side?
15.
How big do you think the risk is generally of growing lithium protectionism in LATAM? We saw Mexico nationalise its lithium deposits in 2022. Obviously, we just talked a lot about Chile. Who might be next to go down this path of lithium protectionism?
16.
What does it mean for local policy governing lithium extraction when we talk about lithium protectionism? Do you think we will see more policy tightening broadly across LATAM? Where in the operational and development cycle do you think we’ll see that?
17.
Do you expect any tightening specifically in tax and royalty policies or permitting at all?
18.
What is your long-term outlook for the lithium triangle? We discussed Chile, but if we consider what’s going on with Bolivia and Argentina, do you see this particular area of the world – where we see so many of the world’s currently identified reserves – being locked out in the long-to-very-long term?
19.
In your time looking at the LATAM region, have you developed any framework regarding leading indicators around government stances in the lithium triangle countries? Are there any indicators that imply that nationalisation-style initiatives or anything around tightening state control of mineral assets are about to come?
20.
Against the backdrop of the lithium protectionism we’ve discussed, where do you still see hope in LATAM for a favourable lithium policy? In our previous Forum Interview [see LATAM Lithium – Argentina Mining Policy Outlook & Geopolitical Risks – 9 November 2022], you outlined Argentina as an attractive jurisdiction.
21.
What are the key policy items in the Argentinian toolbox to help encourage increased FDI in the country’s lithium potential?
22.
If you were to design a policy strategy to maximise lithium FDI for Argentina, how do you think you’d go about it? Would you remove capital controls, implement subsidies, loosen taxes or loosen permitting?
23.
When we think about differences in jurisdictional and policy risk across mining jurisdictions in LATAM, do you think that, long term, being in an attractive or relatively attractive jurisdiction vs other LATAM jurisdictions is a competitive advantage for operators? We talked about SQM and Albemarle in Chile, where the policy stance might be tightening. However, the flagship project of Allkem, which is looking to merge with Livent to become a top three producer, is in Argentina. Do you think that’s a competitive advantage there, so just being in a more attractive regime?
24.
Are there any other countries in LATAM that you think could be attractive future lithium jurisdictions?
25.
Do you have any final thoughts on LATAM lithium?
