Chile's lithium strategy will not bring rapid results

Significance

It was welcomed in principle by potential investors as a pathway through legal restrictions that have impeded the development of most of Chile’s vast lithium reserves. However, pending details of the conditions under which investment would be permitted and, particularly, the state’s role, it is unclear to what extent and when the strategy will be reflected in higher lithium output.

Impacts

• Critics argue that the strategy, with its emphasis on the state’s role, is biased in favour of attracting Chinese investment.
• Crucially, the government has largely skirted the issue of the royalty that would be levied on new lithium projects.
• The lithium industry’s development will be crucial for fiscal revenues in Chile over the coming decade.