Chile Lithium

What it is

Chile holds the world's largest lithium reserves, estimated at approximately 9.3 million metric tons of lithium content (USGS Mineral Commodity Summaries 2026), about 36% of the global total. All commercial production comes from the Salar de Atacama, a roughly 3,000-km2 salt flat in Chile's Atacama Region at 2,300 meters elevation, where lithium-rich brine sits beneath the salt crust. Two companies extract that brine under CORFO (Chile's state economic development agency) contracts: SQM (Sociedad Quimica y Minera de Chile), the world's second-largest lithium producer, and US-based Albemarle Corporation. Both concentrate brine in solar evaporation ponds, then refine it at nearby plants to produce lithium carbonate and lithium hydroxide for battery supply chains. Atacama brine is among the cheapest lithium to produce anywhere, owing to high brine grades and the Atacama's extreme aridity.

History

Chile's lithium sector traces to 1980, when Foote Minerals, an Albemarle predecessor, signed the original Salar de Atacama brine extraction contract with the Chilean state. SQM entered in the 1990s after privatization, acquiring leases on what proved to be the world's most productive lithium field. Chile dominated global production through the early 2010s. By 2022, Chile supplied roughly 30% of world output, but that share began falling as Australia's hard-rock spodumene production scaled rapidly and no new Chilean salar had entered production since CORFO's 2016 and 2018 contract extensions.

On April 20, 2023, President Gabriel Boric announced Chile's National Lithium Strategy, designating lithium a strategic resource and requiring state participation, through Codelco, in all future extraction. On December 27, 2023, Codelco and SQM signed a joint-venture agreement creating a new operating company with Codelco holding a 50%+1 majority share. Chile's Supreme Court cleared the last legal challenge to that structure on January 26, 2026. The full history of that ruling is in 智利最高法院为SQM与Codelco锂业合资项目扫清障碍，结束两年法律不确定性.

Current state

Chile produced approximately 250,000 to 280,000 metric tons of lithium carbonate equivalent (LCE) in 2024-2025, placing it third globally behind Australia and China. The Codelco-SQM joint venture is in its 2026-2030 operational integration phase: SQM continues to manage day-to-day Atacama production while Codelco builds lithium technical capacity, with Codelco scheduled to assume full operational management in 2031. The JV targets 300,000 metric tons LCE in additional Atacama output across 2025-2030, then 280,000 to 300,000 metric tons LCE per year from 2031 to 2060, when the SQM concession expires. From 2031, the Chilean state receives 85% of the operational margin through dividends and royalties. In Q1 2026, the JV transferred US$530 million to the Chilean state; SQM's Q1 2026 earnings showed a 69.8% year-on-year revenue gain on a lithium price recovery to US$18/kg.

Albemarle's CORFO contract extends to 2043. In 2024, CORFO granted Albemarle an option to increase its extraction quota by 240,000 metric tons lithium metal equivalent. On March 25, 2026, Albemarle submitted an Environmental Impact Assessment for the Atacama's first commercial Direct Lithium Extraction (DLE) project, a technology recovering over 94% of lithium from brine while returning depleted brine to the salar, versus roughly 40-50% under conventional evaporation ponds.

Relationships

Chile, Argentina, and Bolivia form the lithium triangle, the driest quarter of South America and the site of most of the world's known lithium brine resources. Chile's state-majority model contrasts with Argentina's decentralized, province-led framework under President Javier Milei (from late 2023), which has drawn more private exploration capital. Bolivia's fully state-run approach at the Salar de Uyuni has produced minimal commercial output despite large reserves. China is embedded in the supply chain: Tianqi Lithium is SQM's second-largest shareholder at approximately 21% after a stake reduction in February 2026. The United States, the European Union, and Japan have pursued offtake arrangements and investment frameworks with Chile to secure Atacama lithium supply for domestic battery manufacturing.

What to watch

• Whether Codelco builds lithium technical capacity by 2031 to assume Atacama management from SQM without disrupting output; Codelco has no prior lithium operating experience.
• Albemarle's DLE permitting timeline: a green light would establish the first commercial-scale DLE operation in Chile and a global template for brine-efficient extraction.
• Chile's progress opening non-Atacama salars, including Maricunga, under the four-category classification the Chilean government announced in March 2024.
• Lithium price trajectory: the JV's 85% margin-sharing structure concentrates Chilean state revenue risk on a commodity at US$18/kg in Q1 2026 but volatile since 2022.