The electric-car revolution is here and Chile is looking to ramp up production of the lithium the industry needs for batteries. Or it would be, but for a bitter dispute between the government and the former son-in-law of a military dictator.
After Chile’s government moved to withdraw its license to exploit one of the world’s largest deposits, Soc. Quimica & Minera de Chile SA opted to invest in a lithium project across the Andes in Argentina and is trying to block a project by Albemarle Corp. in Chile. SQM is controlled by Julio Ponce, the former husband of the late dictator Augusto Pinochet’s daughter.
Demand for lithium is soaring as Tesla Motors Inc. prepares to start production of its mass-market Model 3 battery-powered car and Chevrolet prepares an all-electric “Volt”. The soft, silver-white metal is also used in cell phones.
As of last year, Chile held 54 percent of the world’s known lithium reserves, almost all of it in brine underneath the vast salt flats of the Atacama desert. For now though, it’s neighboring Argentina that looks to be moving faster to capture surging demand, rather than the normally investor-friendly Chile. New Argentine President Mauricio Macri has removed currency and capital controls and a mineral export tax to lure investment.
Losing Ground
“This bickering and this back and forth in Chile is detrimental” to production, said Chris Berry, president of research firm House Mountain Partners LLC and editor of the Disruptive Discoveries newsletter. At the same time “the political climate in other parts of the world is changing — and the case in point is Argentina.”
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