Chile reached a deal with Albemarle Corp, the world’s top lithium producer, to settle a contract dispute and would not submit a previously threatened arbitration claim against the U.S-based miner, the Chilean Economic Development Agency (Corfo) announced on Thursday (Jan. 24).
The dispute was focused on an amendment to the contract that requires Albemarle to supply up to 25 percent of its annual lithium output at a discount to businesses investing in Chile for producing battery metals.
Disagreement between Corfo and Albemarle had been how much discount should be applied on the lithium prices, arousing the threat of arbitration.
In December 2016, Albemarle and Corfo signed an Amendment to the Basic Agreement to raise the company’s approved lithium quota to 2 million metric tons (MT) on an LCE basis. The Amendment enables Albemarle to have an annual output of more than 80,000 MT of technical and battery grade lithium salts through at least 2043 at its numerous battery grade facilities at La Negra, Chile.
Eric Norris, Albemarle’s president of lithium, said that the new deal signed with Corfo was “in line with what we expected our commitment on preferential pricing and terms to be.”
“The agreed upon process will have no material impact on our anticipated earnings growth, margins or other financial results,” Norris added.
Albemarle operates in the Salar de Atacama desert in northern Chile, which accounts for nearly 40 percent of global lithium production. Corfo, which awards mining rights in the lithium-rich salt flat to Albemarle, had in October last year threatened to withdraw its contract with Albemarle in response to the dispute.
According to the contract amendment, Albemarle was required to provide the ultralight battery metal at a reduced price, which is intended to boost a value-added lithium industry in Chile.
In March, Corfo signed contract with Chile’s Molymet, Sichuan Fulin Industrial Group of China and a joint venture between Samsung SDI Co Ltd and South Korea’s POSCO, all of which will produce battery components in Chile using the discounted lithium from Atacama, with a total contract value of $754 million.
Those projects had been negatively affected more or less by the spat between Albemarle and Corfo.
Now an end to the contract dispute and the concluded new deal would enable the three delayed projects to move forward.
As Corfo attorney Maria Elina Cruz said in a statement, striking a deal will allow Chile to roll out the value-added lithium industry that was the heart of the contract.