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I. Overview of the News Event On 21 October 2026 local time, during London LME Week, Chile’s Minister of Economy and Mining, Daniel Mas, gave an interview to Reuters in which he announced an ambitious output target: Chile plans to raise its annual lithium production from the current approximately 300,000 tonnes to 700,000 tonnes within the next five to ten years, an increase of more than twofold. With respect to the implementation path, Mas disclosed that five lithium projects are currently awaiting government approval. These projects will be operated entirely by private companies, and approval is expected to be completed by early 2027. After these five projects are approved, Chile will launch public tenders for another five lithium projects. This two-step strategy of “approving five first and then tendering another five” constitutes the core mechanism for Chile to accelerate the release of lithium production capacity. It is noteworthy that this 700,000-tonne target represents a significant upward revision from the previous government’s position. In the National Lithium Strategy formulated in 2023 by the previous government of Gabriel Boric, the output target was set at approximately 430,000 tonnes by 2034. The figure now given by Mas is 270,000 tonnes higher than the original target, an increase of 63%. II. Current Fundamentals of Chile’s Lithium Industry Production and Market Position Chile is the world’s second-largest lithium producer, after Australia, but the gap between the two is widening. According to industry statistics, Chile’s lithium output was approximately 280,000 tonnes of lithium carbonate equivalent (LCE) in 2024 and increased to approximately 300,000 tonnes in 2025, of which the SQM operation contributed 209,000 tonnes and the Albemarle operation 74,000 tonnes. Output is expected to be in the range of 300,000 to 330,000 tonnes in 2026. However, Chile’s global market share has fallen from approximately 30% a decade ago to below 25%, as rapid capacity expansion in Argentina, Australia and China continues to erode its share. Resource Endowment and Production Concentration Despite the decline in market share, Chile’s resource endowment remains exceptional. The country possesses nearly 41% of the world’s proven lithium reserves. Among these, the Salar de Atacama is the world’s highest-grade and lowest-cost salt-flat lithium resource, with brine lithium concentrations of 600–2,000 mg/L and lithium carbonate production costs of approximately US$2,500–3,000 per tonne, far below the US$8,000–12,000 per tonne cost level of hard-rock mines in Australia. The problem, however, lies in the high concentration of production: all of Chile’s current lithium output comes from a single location, the Salar de Atacama, and is operated by only two companies, SQM and Albemarle. This “single salt flat, duopoly” structure is both an advantage—scale effects and cost leadership—and a bottleneck, namely limited room for expansion and insufficient risk resilience. Main Operating and Under-Construction Projects Salar de Atacama—SQM Operation: Output was approximately 209,000 tonnes LCE in 2025 and is expected to be 246,000 tonnes in 2026. SQM is advancing capacity expansion, with lithium carbonate capacity climbing toward 240,000 tonnes per year and lithium hydroxide capacity expected to rise to approximately 100,000 tonnes per year by mid-2026. In addition, Nova Andino Litio, a joint venture established by SQM and Chile’s state-owned copper company Codelco, officially began operations in December 2025. The joint venture will manage the lithium resources of the Salar de Atacama until 2060, with a long-term capacity target of up to 470,000 tonnes LCE per year. Salar de Atacama—Albemarle Operation: Output was approximately 74,000 tonnes LCE in 2025 and is expected to be approximately 71,000 tonnes in 2026. Albemarle has completed construction of its third lithium carbonate plant, with capacity of 20,000–24,000 tonnes per year, and is currently applying for environmental permits for a direct lithium extraction (DLE) technology project, the TED Project, with the goal of nearly doubling recovery rates without increasing brine extraction. Maricunga Project: A lithium project involving Codelco and Rio Tinto. Rio Tinto plans to invest approximately US$900 million to acquire a 49.99% interest, while Codelco will retain control. Once fully operational, the project is expected to produce 50,000 tonnes LCE per year. It is currently awaiting final approval from Chile’s and China’s antitrust authorities. III. Review of the Previous Government’s Lithium Strategy: Boric’s “State-Led” Approach Core Content of the 2023 National Lithium Strategy On 20 April 2023, then left-wing President Gabriel Boric unveiled the Guidelines for the National Lithium Strategy, marking a major shift in Chile’s lithium policy. The core logic of the strategy can be summarized in three points: First, full state participation. Boric stated explicitly that “the lithium industry must serve the people, and the state needs to participate throughout the entire lithium production cycle.” The strategy required the state to exercise leadership or controlling participation in all future lithium projects, with public-private partnerships (PPPs) as the main cooperation model and state-owned enterprises required to hold controlling positions in joint-venture structures. Second, strengthening resource sovereignty returns. Taking the Salar de Atacama as an example, the joint-venture agreement reached between Codelco and SQM stipulated that during the 2025–2030 transition period, the government—through Codelco, Corfo and the national treasury—would receive approximately 70% of the joint venture’s pre-tax operating profit; from 2031 onward, this proportion would rise to 85%. This is far higher than the level of royalties previously paid by SQM to Corfo. Third, ecological protection and technological upgrading. The strategy emphasized the use of new technologies such as direct lithium extraction (DLE) to reduce water use and improve recovery rates, while establishing a salt flat protection network and committing to protect 30% of salt flat ecosystems by 2030. Implementation Results and Controversies of the Strategy During Boric’s term from March 2022 to March 2026, the lithium strategy achieved one landmark result: in May 2024, Codelco and SQM signed a cooperation agreement; in December of the same year, the joint venture Nova Andino Litio SpA was formally established; and in January 2026, it was approved by Chile’s Supreme Court, completing a complex process spanning more than 20 regulatory approvals covering Chile, China, Brazil, Saudi Arabia and the European Union. Nevertheless, criticism also exists. Manuel Viera, Chairman of the Mining Council, publicly pointed out that the root cause of Chile’s loss of leadership in lithium was “political constraints rather than geological limitations”—the Mining Law’s classification of lithium as a state-owned resource and its strict restrictions on development access severely suppressed private investment enthusiasm. Data show that from 2023 to 2025, Chile added zero new lithium mining projects, and in the first half of 2025, lithium carbonate export revenue fell by 34% year on year. In the Mining Investment Attractiveness Index published by the Fraser Institute, Chile ranked only 32nd among 68 jurisdictions. In addition, several Special Lithium Operation Contracts (CEOL) promoted by the Boric government were rejected by regulators due to legal procedural defects, and some contracts were ruled invalid because “the award criteria contained legal defects,” exposing friction costs in institutional design and implementation. IV. The Kast Government’s Policy Shift: “Private-Sector-Led” Political Transition and Change in Philosophy On 11 March 2026, right-wing President José Antonio Kast was formally inaugurated with 58% of the vote, and Chile’s lithium policy entered a new cycle. After taking office, Kast implemented a series of landmark reforms: Institutional restructuring: The formerly independent Ministry of Mining was merged into the Ministry of Economy, and Daniel Mas, who has an agronomy background, was appointed to oversee both portfolios, with the aim of strengthening cross-departmental coordination and implementing the governing commitment to “combat bureaucracy.” Tax incentives: The corporate income tax rate for mining companies was further reduced from 15% to 10%, the scope of resource tax relief was expanded, and export-oriented mining enterprises were kept at a zero VAT rate. Faster approvals: A new Office for Sectoral Authorizations and Investment (OASI), which began operating in January 2026, was established; environmental assessment regulations were revised; and the goal was set to shorten the average approval period for mining projects from 18 months to 9 months. Mas disclosed that the processing time for mining project appeals had been reduced by 80%, and that since 2026, 22 mining projects with total investment of nearly US$3 billion had been approved. The government also formed an economic committee composed of 12 ministers, which meets every 15 days to track the progress of major projects. Foreign investment liberalization: The cap on foreign mining companies’ shareholdings was raised substantially from 35% to 70%, breaking the previous restriction that joint ventures must be more than 50% state-owned. Specific Adjustments to Lithium Policy In the lithium sector, the Kast government’s shift in attitude is particularly clear. Mas’s statement in the interview—“We are working to change things so that the private sector leads mining in order to accelerate progress”—forms a sharp contrast with the previous government’s tone that “the state must participate throughout the entire cycle.” Specifically, the new government has questioned or adjusted some practices established during the Boric period: Questioning the direct Atacama agreement: The new government takes a reserved attitude toward the direct agreement signed by Codelco and SQM to extend the Salar de Atacama mining rights to 2060, and advocates replacing the original “private negotiation” allocation method with international public tenders in pursuit of more transparent and market-based resource allocation. CEOL process continued but accelerated: The institutional framework for Special Lithium Operation Contracts has been retained—as of March 2026, 10 CEOLs were under review by the Comptroller General’s Office—but the government has clearly accelerated the approval pace and tends to allow private enterprises to serve as full operators in approved projects. Legal framework not fundamentally changed: It should be noted that, as of mid-2026, the underlying legal architecture of Chile’s lithium industry had not undergone a subversive change. Article 13 of the 1979 Mining Charter, which provides that “lithium is a national strategic resource that cannot be granted as mining concessions,” remains in force, and Decree Law No. 2,886 confirms lithium as a state-reserved resource. Foreign investors cannot control lithium assets by obtaining ordinary mining rights as they can for copper or gold; they still need to enter through channels involving state participation, such as state-owned enterprise leadership and CEOL contracts. In other words, the Kast government’s adjustments are more “market-oriented improvements” at the implementation level than a “privatization revolution” at the institutional level. V. Feasibility Analysis of the 700,000-Tonne Target Supply-Side Gap Calculation Moving from the current approximately 300,000 tonnes per year to 700,000 tonnes per year implies a net increase of approximately 400,000 tonnes of capacity—equivalent to building more than one additional Atacama. Even under the optimistic assumption that the Salar de Atacama reaches a level of 450,000–500,000 tonnes LCE per year around 2030 through DLE technology upgrades and expansion projects—with Nova Andino’s long-term upper limit at 470,000 tonnes—new projects would still be needed to fill a gap of 150,000–250,000 tonnes. If all ten projects under Mas’s “approve five, tender five” plan are implemented, they could theoretically provide sufficient sources of incremental supply. However, salt-flat projects typically require five to eight years from exploration, environmental assessment and community consultation to production, meaning that projects released in this round would not form substantive supply until 2031–2034 at the earliest. The fact that the 700,000-tonne target is set within a “five-to-ten-year” window itself reflects this uncertainty. Favorable Factors First, a solid resource base. Chile has more than 40 undeveloped salt flats, ranks first in the world in proven reserves, and its salt-flat lithium resources have an overwhelming cost advantage globally. Second, positive policy signals. If the Kast government’s pro-market orientation, approval reform and tax incentives can be continuously implemented, they are expected to improve the investment environment. A rebound in Chile’s Fraser Institute ranking will be an important indicator. Third, technological progress. The mature application of DLE technology can improve recovery rates without substantially increasing brine extraction, alleviating the constraints of environmental protection on capacity expansion. Albemarle’s TED Project and Nova Andino’s technology upgrade plans both point in this direction. Fourth, demand-side support. Global electric vehicle penetration continues to rise, and the long-term growth trend of lithium demand remains unchanged. As a low-cost supplier, Chile is more resilient during price downturns and better able to capture profit elasticity during upturns. Uncertainties and Risks First, policy continuity risk. Chile’s lithium policy has already swung sharply between two administrations—from Boric’s “nationalization” to Kast’s “privatization”—and if power changes hands again in the future, the direction could reverse once more. For capital-intensive lithium mining projects with payback periods of more than a decade, policy uncertainty is the largest discount factor. Second, a test of implementation capacity. The target set by Mas is ambitious, but between “announcing a target” and “putting a project into production” lie numerous hurdles, including environmental assessment, indigenous consultation, community relations and infrastructure support. The precedent of multiple CEOL contracts being rejected during the Boric government due to procedural defects shows that the internal friction of Chile’s administrative system should not be underestimated. Third, intensifying market competition. Australian hard-rock lithium mines continue to expand capacity; Argentine salt-flat projects are accelerating production—Olaroz, Hombre Muerto, Rincon and other projects are steadily ramping up; and the West African lithium belt is gradually emerging, including Ganfeng’s Goulamina and Huayou’s Ewoyaa. For Chile to defend its position as the world’s second-largest producer in the early 2030s, or even to challenge Australia for first place again, will depend not only on its own progress but also on the performance of its competitors. Fourth, environmental and social license pressure. The Atacama region suffers from water stress and a fragile ecology, and tensions between salt-flat development and indigenous communities and environmental organizations have long existed. Although DLE technology can reduce freshwater consumption, it is not a “silver bullet,” and the economics of large-scale deployment have not yet been fully verified. VI. Conclusion The 700,000-tonne output target announced by Chilean Mining Minister Mas during LME Week is a quantitative declaration of the Kast government’s new “private-sector-led” policy and a significant upward revision of the Boric-era target of 430,000 tonnes. This upward revision reflects both the new government’s optimistic assessment of Chile’s lithium resource potential and its political will to “regain lost ground” in global lithium battery supply chain competition. From “state-led” to “private-sector-led,” Chile’s lithium policy has completed an almost 180-degree shift in three years. This swing itself demonstrates that how to strike a balance between capturing resource sovereignty and maintaining investment attractiveness remains an unresolved challenge for this South American resource country. Whether the 700,000-tonne target can be achieved will depend on three key variables over the next five to ten years: whether approval reform can truly translate into project acceleration, whether the ten new lithium projects can be advanced and put into production as scheduled, and whether the next government will continue the current market-oriented orientation. For the global lithium market, Chile’s target will not change the supply landscape in the short to medium term of two to three years—the long project cycle of salt-flat projects determines this. In the medium to long term of five to ten years, however, if Chile can genuinely deliver on its 700,000-tonne capacity commitment, it will add a sizable and cost-leading source of incremental supply to global lithium supply, which would be positive for balancing supply and demand and stabilizing price fluctuations. Of course, the premise is that this time Chile will not merely “talk,” but will actually “act.”

Published: Nov 03, 2026 - 4:20 AM (Kitco News) - Gold and silver are seeing a modest recovery after Friday’s market rout, which capped their worst October performance since 2008. Some investors have grown frustrated with the precious metals as prices have struggled in recent weeks, facing rising opportunity costs as central banks around the world attempt to bring inflation under control. Most recently, gold and silver have also been caught in a broader liquidity squeeze as equity markets experienced a significant selloff last week. However, one fund manager said that last week’s selloff, and any further correction, could represent the buying opportunity of a lifetime. “ Silver is about 60% below its $121.64 record, and gold hit a one-year low,” said Jen Bawden, founder of Bawden Capital, in her latest market commentary. “Mainstream financial headlines are screaming about a precious metals wipeout, and retail traders who bought the highs are capitulating in sheer panic. To the untrained eye, it looks like a massacre.” “To seasoned resource investors who understand global capital flows, paper-market mechanics, and cross-asset margin shocks, this is NOT a crisis; it is the exact liquidity air pocket we have been waiting for.” Although the break below critical support levels last week was disappointing, Bawden said that the move was not surprising, given the headwinds facing both gold and silver. She noted that although the Federal Reserve left interest rates unchanged last week, markets still expect rates to move higher in December. She pointed out that the threat of higher interest rates raises the opportunity cost of holding non-yielding assets like gold and silver. Looking at the immediate price action and the technical damage inflicted Friday, Bawden noted that the threat of higher interest rates also appears to be taking its toll on equity markets. The S&P 500 lost 2% ahead of the weekend, its biggest drop since early June. Bawden also noted that short-term volatility is being driven by broader geopolitical uncertainty and the global energy supply crisis stemming from the ongoing war in the Middle East. “The biggest misconception circulating among retail commodity traders is: ‘If the Middle East is on fire and Brent crude is hovering above $113 a barrel, why are gold and silver falling?’” said Bawden. She explained that disruptions to energy supplies are creating significant demand for U.S. dollars, adding another layer of pressure to precious metals. “When conflict disrupts transit in the Strait of Hormuz and energy prices skyrocket, every major energy-importing nation, from Japan and South Korea to Germany and India, faces an immediate terms-of-trade crisis. Because crude is invoiced and settled globally in U.S. dollars, oil shooting up past $100 forces commercial importers to aggressively dump their domestic currencies on the open market to buy massive tranches of U.S. dollars just to keep their power grids running,” she said. Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.) Bawden added that the resulting demand for U.S. dollars is supporting the greenback, while higher energy prices are fueling persistent inflation pressures, raising the prospect of further monetary policy tightening and higher bond yields. Bawden said that all this uncertainty is finally coming to a head as the threat of rising interest rates weighs on the broader economy and equity markets. She pointed out that higher bond yields are reducing the present value of future corporate earnings while also making much-needed capital more expensive to borrow. “When a stretched tech and stock market cracks, it does not fall alone. It can trigger a sudden cash squeeze across many markets. In a sell-off, big funds do not sell what they want to sell. They sell whatever is liquid and easy to sell,” she said. “Gold and silver are very easy to sell.” Although significant technical damage has been inflicted on gold and silver, Bawden said that the weakness is consistent with previous liquidity-driven selloffs. “This is what happened in October 2008 and again in March 2020. Once the forced selling was over, gold and silver turned around and rallied hard,” she said. “In both crises, gold and silver fell sharply along with stocks. After Lehman Brothers collapsed in the fall of 2008, gold fell about 29% and silver more than 50% from their March 2008 highs. In March 2020, gold fell roughly 10% and silver roughly 35% in a matter of days.” Bawden noted that both precious metals subsequently experienced significant rallies after the initial liquidity shocks subsided. “Once the forced selling ended, metals bounced back fast. After 2008, gold rose about 170% by August 2011, and silver climbed to nearly $50. After March 2020, gold gained about 39% to a new record high by August 2020, and silver jumped about 150%,” she said. Although Bawden sees the current selloff as a potential long-term buying opportunity, she warned that prices could fall further before the precious metals market establishes a sustainable bottom. She noted that she has already placed limit orders to take advantage of further weakness, targeting discounts of between 20% and 30% in select mining equities. At the same time, Bawden said that physical demand in Asia could provide some underlying support for silver. She pointed to the divergence between Shanghai and Western silver prices during Friday's selloff, although she acknowledged that China's tax on silver eliminates much of the apparent premium. She also expects Chinese demand for precious metals to remain an important factor supporting prices over the longer term. Bawden explained that the near-term volatility has not changed her long-term outlook. She said that the next decade belongs to hard assets like gold and silver as investors are increasingly forced to protect their purchasing power in a world struggling with unsustainable sovereign debt. “The sovereign debt mountain cannot survive high yields indefinitely without affecting the banking sector and the real economy,” she said. “Governments, corporations and consumers around the world carry huge debts, and those debts get more expensive when interest rates stay high. If rates stay this high or go higher for too long, it will put real strain on banks and on the wider economy.” Bawden expects mounting debt pressures will eventually force central banks to reverse course and ease monetary policy, creating a more favorable environment for precious metals. “When the breaking point hits, central banks will be forced to ease, the dollar’s wartime strength will roll over, and global capital will flood into real, tangible assets,” she said. Source： https://www.kitco.com/news/article/2026-11-02/gold-and-silver-selloff-buying-opportunity-decade-bawden-capital