Chile's new National Lithium Strategy carries significant local and regional implications for the export of lithium, the so-called "white gold" internationally recognised for its potential use in rechargeable batteries. 

On Thursday, April 20th, Chilean President Gabriel Boric announced the new National Lithium Strategy, causing great international commotion due to the preponderant role assigned to the state in the initiative.

The main proposal of the initiative is the creation of a national company through which the Chilean state will participate in the entire lithium production cycle by partnering with private companies interested in exploiting the mineral.

According to official sources from the Chilean government, this initiative seeks to seize "the historic opportunity" Chile has based on its vast reserves of this mineral, considered strategic for the green transition. The strategy aims to increase the country's wealth, develop sustainable exploitation from an environmental and social perspective, and create value-added from lithium in Chile, promoting its global leadership in this industry.

Chile is the world's second-largest lithium producer, only behind Australia, and has one of the largest reserves worldwide. Lithium is a crucial mineral for the construction of rechargeable batteries, essential for the emerging electric vehicle industry. In a context of an energy matrix transition that seeks to abandon fossil fuels, lithium has become a key mineral in the value chain, which is why it has been called white gold.

Given that the Boric government will seek greater state participation in lithium exploitation, two caveats must be made. The first is that the creation of the state company that would carry out this task must be approved by Congress, which has already vetoed some of Boric's projects. The second is that the existing state-owned copper (Codelco) and mining (Enami) companies will be responsible for carrying out this plan meanwhile. 

Both will be in charge of initiating negotiations with the companies already operating in the exploitation of Chilean lithium: the Chilean SQM and the American Albemarle, which have exploitation contracts until 2030 and 2043, respectively. Faced with this situation, the Chilean Mining Minister told Bloomberg that "there will be respect for existing contracts" and that "no one is coercing or acting forcibly on those contracts." 

On the other hand, there is a discussion about whether we are indeed facing nationalization of lithium in Chile. Analysts consulted by Alternative Press have agreed that this is not a proper nationalization, as it has appeared in numerous international media outlets, but rather a measure that gives the state a central role in resource exploitation. 

What impact has this announcement had on the markets? According to the Chilean website La Tercera, Boric's announcements have led to an increase in the stock prices of mining companies listed in Sydney, as a result of negative expectations for the Chilean market. Conversely, there has been a decline in the stocks of those companies with lithium exploitation projects in South America due to the risk that governments will follow the steps of the Boric administration.

On the other hand, the announcements have caused profound discomfort among Chilean political opposition and industrial sectors. In the face of the unleashed criticism, the Minister of Finance, Mario Marcel, highly respected by the Chilean business community, tried to calm the markets, clarifying that the state would only intervene in projects of “strategic significance”.

The Chilean situation presents a contrast with the Argentine situation, where despite recent explorations by YPF, most of the advances have been carried out by foreign private capital companies, showing a pro-market and decentralized strategy. According to specialists consulted by Reuters, although Chile currently has a larger market share than Argentina, it is likely to reverse in the coming years due to the differences in the exploitation strategies regarding the government’s role.