Cecilia Jamasmie | September 8, 2025 | 8:03 am Battery Metals Critical Minerals Markets Latin America USA Copper Lithium
Chile’s state-owned copper miner Codelco and SQM (NYSE: SQM), the world’s second-largest lithium producer, are close to finalizing a landmark partnership to jointly extract lithium from the Atacama salt flats.
The deal first signed in December 2023, stems from President Gabriel Boric’s national lithium strategy, which placed Codelco at the helm of all operations in strategic salt flats. Under the agreement, SQM will hand over a majority stake in its Atacama operations to Codelco in exchange for extending its production rights until 2060.
The pact is expected to be concluded within weeks, though it still requires antitrust approvals, including from regulators in China, which SQM anticipates later this month or in October.
Supporters argue the venture will diversify Codelco’s revenue, currently strained by declining copper output and ballooning debt from over-budget expansion projects. By entering lithium, Codelco can tap into a booming market central to the global energy transition. Partnering with SQM, which already has the infrastructure and know-how, could lower costs and accelerate production.
“Monumental” loss
Critics warn the deal sacrifices too much. Economist Marcela Vera called the agreement “a surrender of sovereignty,” noting it allows SQM to keep nearly half of future revenues from Atacama despite lithium being a non-concessionary resource under Chilean law.
In an opinion column, Vera pointed to Rio Tinto’s $6.7 billion purchase of Arcadium Lithium in Argentina, at half the production capacity of SQM’s Chilean operations, as a sign Chile undervalued its asset.
“Various price and volume scenarios estimate that, under a 100% public scheme or with international bidding, state revenues would have ranged between $45 billion and $365 billion, she wrote. “Adding to this the lost down payment of at least $6.7 billion (…) The potential fiscal damage is monumental”.
Diversification
Codelco’s push into lithium comes as the copper giant struggles with deep structural challenges. The company is grappling with falling ore grades at its aging mines, while four of its flagship expansion projects have run significantly over budget and behind schedule. Debt has climbed to roughly six times earnings before interest, taxes, depreciation and amortization, a level that has revived old debates about Codelco’s long-term financial health.
During Sebastián Piñera’s first administration, a proposal to sell a minority stake in the company sparked public outcry and was shelved, even as Codelco’s debt rose 84% despite strong copper prices.
For the miner, lithium offers a rare chance to diversify away from copper and reduce its dependence on a single commodity.
Successive governments in Santiago have respected past resource contracts, making it likely the agreement will endure beyond Boric’s term, which ends in 2026.
For now, the deal is billed as “historic,” both for giving Chile greater oversight of its lithium resources and for keeping a major private player in the sector.
Source: https://www.mining.com/codelco-sqm-near-final-deal-on-joint-lithium-mining/
