Chile Senator Asks Court to End 400,000 mt Lithium Ore Tender, Will Lithium Supply Face New Pressures?

SHANGHAI, Jan 6 - On Tuesday (4 January) local time, Chile senator applied to the Chamber of Deputies for an injunction aimed at preventing the outgoing government from accepting bids for lithium mining contracts.

As the country with the world's largest lithium reserves, Chile announced last October that it was offering five 80,000-mt quotas to domestic and overseas companies, for the exploration and production of 400,000 mt of lithium resources. The successful bidder will be offered with seven-year long exploration and development right and 20-year long production rights. Chile will charge royalties for the allocation of quotas and variable payments during the production period.

It should be noted that prior to this offer, Chile only allowed domestic companies to engage in lithium resource development. Data shows that the global supply of lithium in 2020 was around 443,000 mt, which means that this tender is close to the global lithium production in 2020.

If the Chilean authorities' 400,000 mt lithium contract tender ends up going bust, the tight global lithium supply will be further exacerbated.

S&P Global reported in December that there will be a lithium shortage in 2022 as the demand exceeds production and depletes the stocks.

The report indicates that lithium carbonate supply will climb to 636,000 mt from 497,000 mt in 2021, but the demand will also jump to 641,000 mt from 504,000 mt.