Analysis Of The New National Lithium Strategy: Nationalization Or An Opportunity For Private Companies?

• Law Firm: Urzua Abogados
• Subject Matter: Corporate/Commercial Law, Environment, Corporate and Company Law, Contracts and Commercial Law, Environmental Law
• Author: Mr Daniel Weinstein
• Published date: 24 April 2023

Just a couple of days ago the Government of Chile released the National Lithium Strategy ("NLE"), perhaps the most important announcement regarding lithium that has been made in the last 40 years, and there are already several national and international media outlets that are talking about a "nationalization" of lithium companies. However, the NLE does not imply the nationalization of these companies, nor does it imply making changes that do not have legal support or that are not the result of an agreement with the companies involved.

What is the National Lithium Strategy?

The NLE is a strategy, not a policy and much less a new institutionality that regulates lithium. It is a set of general and high-level principles and ideas, which aim to promote the development of the lithium industry, based on public-private collaboration. Notwithstanding the fact that several of these principles are ideas associated with the leftist coalition that currently governs Chile, the State and its companies will require agreements and approvals from different actors, including lithium producing companies and Congress, where the government does not have the necessary majority to push through certain reforms that would be necessary to implement the NLE.

It should be noted that so far very few details have been disclosed regarding the NLE, which is of a general nature. From its mere reading there is little information that can be drawn; therefore, giving an informed opinion requires familiarity with the current lithium regulation -which has not been amended-, international treaties, and the political situation of Chile.

Objectives of the National Lithium Strategy.

The NLE seeks to promote the exploration and exploitation of lithium in salt flats, through a public-private collaboration. Likewise, the creation of technical and academic capacities is sought through a Lithium Research Institute.

The state aims to have a preponderant role throughout the production cycle. For this, the current administration proposes the creation of a National Lithium Company, owned by the State, who establishment would require the passing of a law with the approval of a majority of Congress, which currently the government does not have. Until the aforementioned company is created, ENAMI and CODELCO (both existing state-owned companies engaged in mining activities) will be the representatives of the state.

Majority control of the State.

The most controversial point of the NLE is the declaration that...