Wealth Minerals Ltd has entered into an agreement with the fully state-owned National Mining Company of Chile (ENAMI), whereby the parties have agreed to form a strategic alliance to develop and commercialise the company’s lithium projects in the Salar de Atacama and Laguna Verde. The Agreement provides that the parties will have 24 months during which to study and assess the aforementioned properties and to form a partnership for the exploration, development and mining thereof and for the marketing of the products from the projects. The agreement contemplates that the JV will take the form of an incorporated joint venture company in which ENAMI will own 10% of the JV and have a 10% free-carried interest, while Wealth will own the remaining 90% of the JV. The Agreement provides that the parties will have 24 months to enter into a definitive agreement that will govern the formation and operation of the JV.
Hendrik van Alphen, Wealth’s CEO, stated “We are very happy to have ENAMI as a partner for developing our assets. Not only are we now able to draw upon ENAMI’s experience and knowledge for successfully mining and processing resources in Chile, we have gained a strong state partner that can help fulfill our goals of full scale development to achieve production of lithium and by-products in Chile. This will enable Wealth and ENAMI to meet the world’s growing demand for lithium and secure Chile’s position as a premier player in global lithium markets.”
Under current Chilean law, and since January 1, 1979, lithium cannot be exploited in Chile by regular mining concessions. The Chilean Mining Code establishes that lithium is a strategic mineral and expressly provides that the exploitation of “non-concessible” mineral substances (which includes lithium) can only be performed by:
- the Government of the Republic of Chile,
- a Chilean state-owned company, or
- by means of administrative concessions or special operation contracts that meet the requirements and conditions set forth by the President of the Republic of Chile for each such case.
While a few active licenses in Chile were granted before the current state regulations came into force, the lithium production associated with these licenses represents a small portion of the anticipated lithium supply. The agreement provides Wealth, along with ENAMI, the ability to apply for the grant of the permits required to explore, develop, produce and export lithium in accordance with the terms of export quotas, in effect from time to time.
Chile is the world’s second largest lithium producer and the largest producer of lithium extracted from high‑quality and high‑concentration brines, accounting for approximately 35% of the total global production representing 75,800t of lithium carbonate equivalent. Despite this significant footprint in the industry, lithium production in Chile comes exclusively from two operations in a claim owned by CORFO in the Atacama Salar. CORFO (Production Development Corporation), a government body responsible for regional development, has contracted production services to both Albemarle and Sociedad Química y Minera de Chile (SQM). Neither Albemarle nor SQM own the licenses through which they extract lithium, as both companies contract directly with CORFO and not the Chilean state . As such, all contracts governing the relationship between CORFO, Albemarle and SQM are specific to their operations in the Atacama Salar and are not representative of the current regulatory regime governing the exploitation of resources from lithium licenses generally.
In the past year, other companies have begun to enter the lithium space in Chile, most notably CODELCO (National Copper Corporation), Wealth and Lithium Power International, with projects in preliminary stages of development. Chile’s new President, Sebastián Piñera, and the incoming Minister of Mines, Baldo Prokurica, have publicly stated their support for Chile’s mining industry and their political platform of attracting foreign and domestic investment to Chile’s natural resource sector.
