Chile’s Latest Move Marks One Step Closer to the Establishment of Lithium Version of OPEC

Last year, there were media reports that Argentina, Bolivia and Chile were working to promote the establishment of a "Lithium Triangle OPEC" similar to the Organization of the Petroleum Exporting Countries (OPEC) to reach a "price agreement" in the event of lithium price fluctuations. Chile's plan to nationalize lithium mines, if implemented, would advance the plan.

On April 20, Chilean President Gabriel Boric said he would nationalize the country's lithium industry and that future contracts for lithium mining would only be awarded to state-controlled public-private partnerships. He emphasized that for projects of strategic value to the country, Chilean state-owned enterprises must occupy a controlling position in public-private partnerships.

As we all know, OPEC is a cartel of oil-producing countries responsible for setting the level of oil production in order to affect the price of a barrel of oil. Out of the same idea, the three countries hope to reach an agreement on the price and coordinated production of lithium mines, and formulate guidelines for the sustainable development of the industry and the development of related technologies.

Some analysts believe that the original intention of the Chilean government to nationalize lithium mines should be to promote the establishment of "LiPec” (lithium version of OPEC), thereby bringing more income to the government. However, in the long run, the result of government deeply intervening in the market is likely to damage the enthusiasm of mining companies and affect the output of Chile's lithium mineral products. In the end, the government's goal of generating income may not be realized.