Alert: Boric moves Chile toward socialism with plan to nationalize private lithium companies

Chilean President Gabriel Boric said Thursday he wants to change the country’s laws so they require private companies partner with the government in lithium extraction ventures, an element which is in high demand for electric battery use.

In an apparent move toward socialist state control, Boric announced on a Chilean news network that the government will soon take control of the entire lithium production cycle in a “public-private collaboration.”

“Any private company, whether foreign or local, that wants to exploit lithium in Chile must partner with the state,” he said.

Chile currently has 9.6 million tons of lithium, making it the world’s third largest reserve holder of the element. The country holds 26% of the world’s lithium reserve with 22% of the world’s production, according to the International Trade Administration at the U.S. Dept. of Commerce.  

It is also the world’s largest producer of copper, holding 29% of that element’s reserves, says the U.S. federal agency.

Argentina has 19.3 million tons and Bolivia has 21 million, according to the U.S. Geological Survey. Still, last year Chile was the world’s second largest producer with about 39,000 metric tons, after Australia, which produced 61,000 tons, according to a report published by the Wilson Center.

“Boric wants to create a National Lithium Company to partner with private companies, but he conceded that likely will not happen quickly because it would require support from an absolute majority in both houses of Congress, which is fragmented among a variety of parties,” said an Associated Press report on the issue.

For now, Boric said, private parties for lithium extraction will be compelled to sign agreements with the state owned National Copper Corporation.

Chile has two primary private companies that mine lithium in Chile: an American owned company, Albemarle, and Chile's Chemical and Mining Society (Soquimich), which has been under the leadership of Julio Ponce for 30 years. Ponce’s whose father-in-law was the late Chilean autocrat, Augusto Pinochet.

The Chilean president said Soquimich’s contracts will be respected, raising questions about how the country will respond to the U.S. owned enterprise.

As part of his plan, Boric said the government will also help promote the development of lithium products to surpass Australia and once again become the world’s leading lithium producer.

Marcela Hernando, Chile’s minister of mining recently assured country’s Congress that the state needs to work hand in hand with the companies because “technology and knowledge are in private industry.”

He suggested a type of public-private partnership is needed, while adding the caveat that “the state is the owner of lithium,” an assertion he considered is an “uncompromisable” position of the Boric administration.

“Soquimich paid more than $5 billion to the government last year from its mining of lithium, almost double the trevenue generated by the state copper company,” according to the AP. “Albemarle's payments totaled $600 million.”

Lithium is in high demand with the current U.S. move toward electric vehicles and renewable energy. Many of the battery parts are manufactured in China, raising troubling questions from American Congressional leaders about how such products and energy sources may create Western energy dependency on rival countries and regimes with poor human rights records.

Collectively, those two companies were responsible for $2.3 billion of lithium based investments, according to a Statista report. Forecasts predict if the West remains on its current pro-renewable energy path, global demand for lithium will be 40 times what it is today by the year 2040, according to the Wilson Center.