Opportunities in the lithium sector in Chile

Chile owns 54% of the world's lithium reserves, about one-third of the global lithium supply, according to the US Geological Service. Other important players are China, Australia and Argentina.

Lithium market is smaller than others, with US $ 2.5 billion in 2014 (copper market moves around US $ 100 billion). In Chile there are two major producers, SQM (http://www.sqm.com/en-us/home.aspx) and Rockwood (http://www.rockwoodlitio.cl/), which account for about 40% of the world market.

During 2014 the price lithium carbonate was around US $ 6,000 / ton and in 2016 it exceeded US $ 8,000.

The use of lithium in rechargeable batteries currently represents 33% of global demand with an expected growth of more than 10% annually over the next 20 years, due to the development of electric vehicles and energy storage systems.

Lithium industry is characterized by the existence of a few large producers in the world. A high production capacity is required to enter the market. In other words, there are high economies of scale with respect to market size.

Chile and Australia are currently the two largest lithium producers in the world, while China, South Korea and Japan are the largest consumers. Argentina is also strongly pushing its industry to position itself as a protagonist in the coming years.

The challenge for Chile is to increase production to meet the increasing demand before other competitors.

Chile must generate mechanisms to boost the lithium industry, either through exploitation by State companies, private companies, or what seems to be more ideal, an alliance between both sectors. In particular, it should continue to develop lithium not only from the perspective of increased production, but also to grow from the perspective of sustainable production and seeking the most efficient way of adding value in the country.

The Development Corporation (http://www.corfo.cl) is sponsoring a study about opportunities for local development in the lithium value chain in electronics and thermal storage for solar energy.

The idea is to promote research and productive programs where universities, research centers and national and international companies come together.

Likewise, it seeks to identify human resources, infrastructure and technological development needs that allow them to advance in their respective value chains.


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