Codelco-SQM Lithium Deal Clears Final Hurdle After China Approval

Codelco-SQM Lithium Deal Gains China’s Approval: A Major Step for Global Lithium Production

Chile’s state-owned copper giant, Codelco, and local lithium producer SQM have secured final approval from China’s antitrust regulators for their joint venture in Chile’s Atacama salt flat. This approval is the last major hurdle before the deal becomes official, marking a key milestone in boosting lithium production. As a result, Chile solidifies its position as the world’s second-largest lithium producer, essential for electric vehicle (EV) batteries and energy storage.

China’s Approval and Key Regulatory Conditions

China’s approval followed a series of regulatory approvals from Chile and other countries. However, the Chinese regulators set specific conditions before giving the green light. Codelco and SQM must supply lithium to Chinese customers on fair terms, with prices capped at a set percentage above the benchmark market price. Additionally, the companies must keep sensitive information confidential and follow certain corporate governance practices.

These conditions are part of China’s efforts to secure its lithium supply chain as demand for lithium-ion batteries continues to grow. With this partnership, Codelco and SQM will significantly contribute to global lithium supply, benefiting China and other international stakeholders.

Next Steps for the Codelco-SQM Lithium Venture

Now that China has approved the deal, Codelco and SQM are awaiting final approval from Chile’s comptroller’s office, which is expected by the end of the year. Once approved, the joint venture will start, boosting lithium production in the Atacama salt flat, one of the world’s richest lithium deposits.

Chile’s new economy minister, Alvaro Garcia, anticipates the partnership will close before the current administration ends in 2026. This accelerated timeline underscores the growing demand for lithium driven by the rise of electric vehicles and renewable energy.

The deal has already passed scrutiny from regulators in the European Union, Brazil, Japan, South Korea, and Saudi Arabia, signaling broad international support. Despite some opposition from Tianqi, a major investor in SQM, the deal appears poised for completion.

SuperMetalPrice Commentary: A Strategic Move in the Lithium Market

The approval of the Codelco-SQM lithium deal marks a critical turning point for the global lithium market. This partnership strengthens Chile’s position as a key lithium producer, crucial for the clean energy transition. Lithium remains an essential material for electric vehicles and energy storage systems, and this deal highlights the strategic importance of scaling up production to meet growing demand.

As China’s role in the global lithium supply chain continues to expand, the Codelco-SQM venture could serve as a model for future partnerships. Investments like this will be vital in addressing the increasing demand for sustainable energy solutions, from electric vehicles to renewable energy storage.