SMM, Sep 17: Chile's lower house of parliament has begun studying a proposal to impose a 3 per cent nominal royalty on copper and lithium miners operating in the country, according to foreign media reports. The tax applies to miners with an annual output of more than 12000 tons of copper and more than 50000 tons of lithium.
Chile expands lithium mine size SQM hopes to become the world's largest lithium miner
Chile is the world's largest copper producer and the largest known reserve of lithium. Chile, which has about 52% of the world's known lithium reserves, recently lost its title as the top lithium producer, but both companies and governments are trying to turn things around. In the past few months, Chile's SQM, the world's second-largest lithium producer, has been expanding its mines. The company recently completed the first phase of increasing production of lithium carbonate in Salar del Carmen, Chile, with an annual production capacity of 70, 000 tons. CEO Patricio de Solminihac said last month that the company's next step will be to achieve our goal of 120000 tons a year, which is expected to be completed by the end of 2019. The company believes it will soon overtake its American rival Albemarle as the world's top lithium miner by 2022. SQM expects to increase capacity that year to 28 per cent of total global production, compared with 16 per cent for Albemarle. At the same time, Chile expects lithium batteries to soon become its second largest mining asset, after copper. It is currently the country's fourth largest export.
SMM believes that the news of Chile's mining tax on copper and lithium mines is only a proposal, so it will have no impact on the lithium market in the short term. If the bill is formed and passed, it will boost the price of lithium mines in the long run and increase costs for downstream manufacturers. However, in view of the current oversupply of lithium salt, the overall price direction of the product is more likely to fall, but to some extent will be supported by the cost. But its cost support, in the short term, the performance is weak.
