WA lithium’s main global lithium rival, Chile, strikes a major deal aimed a boosting lithium production

Chile’s Codelco and SQM completed a landmark deal aimed at boosting lithium extraction from the Atacama Desert, giving the South American country’s government control of one of the world’s richest reserves of the metal.

The state-owned copper giant and lithium producer SQM formed a joint venture called NovaAndino Litio SpA by merging Codelco affiliate Minera Tarar SpA with SQM Salar SpA, the companies said in a statement over the weekend.

The deal will have a positive and material impact on Codelco’s 2025 financial results, according to the two companies.

As part of the transaction, SQM transferred all of its mining concessions in the Salar de Maricunga to Codelco.

NovaAndino Litio will control all lithium exploration, production and sales in the Salar de Atacama until 2060, ensuring continuity under existing contracts with development agency Corfo and new agreements that will take effect from 2031 onward, according to the statement.

The partnership is a pillar of Chilean President Gabriel Boric’s agenda to have more state control in key lithium assets while boosting output in the transition away from fossil fuels.

The deal cleared its final major hurdle in November, when China granted approval, conditional upon the companies honouring existing commercial commitments and continue supplying Chinese customers on a “fair, reasonable and non-discriminatory” basis.

Australia is the world’s largest producer of lithium, with virtually all of that production coming out of Western Australia. Chile is the world’s number two producer.

Wesfarmers and SQM equally share a $2.6 billion joint venture — Covalent Lithium — which runs the Mt Holland mine in the Wheatbelt and a lithium hydroxide refinery at Kwinana.

SQM has also joined forces with Gina Rinehart to develop the Andover lithium project in the Pilbara after the duo acquired Azure Minerals for $1.7 billion in late 2023.