ARKANSAS, January 19 (Future Headlines)- Lithium, a critical component in the production of rechargeable batteries, has positioned Chile as a key player in the global lithium market. The South American nation’s vast reserves of semi-processed lithium have become a focal point for South Korean battery makers eager to establish processing plants. The executive director of InvestChile, Karla Flores, revealed that the foreign investment promotion body has engaged in discussions with representatives from multiple South Korean companies, signaling a growing interest in collaborating on lithium processing ventures.
Chile, often referred to as a lithium heavyweight, boasts the world’s largest lithium reserves, making it a strategic destination for companies looking to secure a stable supply of this essential mineral. The country’s emphasis on moving beyond traditional mining practices aligns with the global trend of seeking value-added processes in the lithium supply chain. Asian companies, in particular, have shown a keen interest in partnering with Chile to tap into its lithium potential.
South Korean battery manufacturers are at the forefront of exploring opportunities to develop lithium processing plants in Chile. The objective is to leverage Chile’s lithium reserves and convert semi-processed lithium into advanced materials, such as iron phosphate, which are crucial for the production of rechargeable batteries. These processing plants could play a significant role in supplying lithium-related materials to the US market.
Karla Flores highlighted the potential for Korean projects in Chile to export lithium cathodes to the United States. This strategy aligns with the growing demand for lithium-related products in the US, particularly in the electric vehicle (EV) and renewable energy sectors. The interest from South Korean companies underscores the global nature of the lithium market and the need for diversified sources of this critical resource.
Chile’s ambition to move down the value chain in the lithium sector is evident in its efforts to encourage foreign investment in processing facilities. Rather than exporting raw lithium, the country aims to enhance its capabilities in producing advanced lithium-based materials. This value addition is not only economically beneficial for Chile but also aligns with the broader industry shift towards creating more sophisticated and refined lithium products.
Chile’s willingness to collaborate with international partners is evident in its previous agreements with Chinese and Japanese companies. In the past year, Chile granted Chinese firms access to preferential prices for lithium carbonate produced by SQM, the world’s second-largest lithium producer. This collaboration involves supplying lithium carbonate for a cathode factory set to be constructed in northern Chile. Additionally, Japanese companies have shown interest in making investments in Chile’s lithium sector, further highlighting the country’s appeal to diverse global players.
The potential export of lithium cathodes from Korean projects in Chile to the US holds strategic significance. As the United States places a growing emphasis on securing a robust and diversified clean-energy supply chain, lithium is a crucial component in the development of batteries for electric vehicles and renewable energy storage. Lithium processed by Korean companies in Chile may qualify for US incentives, further enhancing the appeal of such collaborations and reinforcing Chile’s position as a key contributor to the US clean-energy ecosystem.
Chile’s existing free-trade agreement with the United States provides an additional advantage for foreign investors. The agreement facilitates smoother trade and economic cooperation, making Chile an attractive destination for companies seeking to navigate the complexities of international business seamlessly.
Reporting by Alireza Sabet; Editing by Sarah White