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Lithium and Chile: looking back and looking forward

Author

Listed:
  • Philip Maxwell

    (Curtin University)

  • Mauricio Mora

    (Nexis Consulting SPA)

Abstract

This paper focuses on the economic fortunes of the Chilean lithium industry over the past three decades and considers its likely future directions. When SQM commissioned its brine extraction facilities in the Salar de Atacama in 1995, joining the already established SCL (operating since 1984), Chile emerged as the world’s leading lithium producer. It retained this position until 2013 when Australian production surpassed it. Chile, Australia and Argentina now dominate the early stages of the lithium industry. Four multinational companies—Albemarle, SQM, FMC Corporation and Tianqi Lithium—accounted for more than 83% of world lithium output in 2016. These firms appear to exert considerable market power. Against this background, we outline and assess recent developments in the Chilean lithium sector, noting that the second Bachelet government (in office from 2014 to early 2018) convened a year-long National Lithium Commission in 2014. The members of this group suggested strategies to maintain and enhance Chile’s competitive advantage in the lithium sector. The final section considers the implementation of these in the light of the election of the second Piñera administration which took office in March 2018.

Suggested Citation

  • Philip Maxwell & Mauricio Mora, 2020. "Lithium and Chile: looking back and looking forward," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 33(1), pages 57-71, July.
    • Handle: RePEc:spr:minecn:v:33:y:2020:i:1:d:10.1007_s13563-019-00181-8
    DOI: 10.1007/s13563-019-00181-8
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    References listed on IDEAS

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    1. Garnaut, Ross & Clunies-Ross, Anthony, 1983. "Taxation of Mineral Rents," OUP Catalogue, Oxford University Press, number 9780198284543, Decembrie.
    2. Maxwell, Philip, 2015. "Transparent and opaque pricing: The interesting case of lithium," Resources Policy, Elsevier, vol. 45(C), pages 92-97.
    3. Yaksic, Andrés & Tilton, John E., 2009. "Using the cumulative availability curve to assess the threat of mineral depletion: The case of lithium," Resources Policy, Elsevier, vol. 34(4), pages 185-194, December.
    4. John E. Tilton, 2018. "Assessing the market power of mineral commodity producers," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 71-76, May.
    5. Perotti, Remco & Coviello, Manlio, 2015. "Governance of strategic minerals in Latin America: the case of Lithium," Documentos de Proyectos 38961, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Gustavo Lagos, 2018. "Mining nationalization and privatization in Peru and in Chile," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 127-139, May.
    7. Ebensperger, Arlene & Maxwell, Philip & Moscoso, Christian, 2005. "The lithium industry: Its recent evolution and future prospects," Resources Policy, Elsevier, vol. 30(3), pages 218-231, September.
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    Cited by:

    1. Guzmán, Juan Ignacio & Karpunina, Alina & Araya, Constanza & Faúndez, Patricio & Bocchetto, Marcela & Camacho, Rodolfo & Desormeaux, Daniela & Galaz, Juanita & Garcés, Ingrid & Kracht, Willy & Lagos, , 2023. "Chile: On the road to global sustainable mining," Resources Policy, Elsevier, vol. 83(C).
    2. E. Petavratzi & D. Sanchez-Lopez & A. Hughes & J. Stacey & J. Ford & A. Butcher, 2022. "The impacts of environmental, social and governance (ESG) issues in achieving sustainable lithium supply in the Lithium Triangle," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 35(3), pages 673-699, December.
    3. Ibarra-Gutiérrez, Sebastián & Bouchard, Jocelyn & Laflamme, Marcel & Fytas, Konstantinos, 2021. "Assessing the potential of quebec lithium industry: Mineral reserves, lithium-ion batteries production and greenhouse gas emissions," Resources Policy, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Chile; Lithium; Collusive behaviour; Vertical integration; Horizontal integration; Value adding; Market power; Mineral policy;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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