The World’s Largest Reserve Of This Metal Just Opened Up

Big changes afoot in one country’s mining sector this week. A place that’s notable for holding one of the world’s largest endowments of a leading specialty metal.

The place is Chile. Where regulators said Tuesday they are considering opening up the lithium sector for outside investment.

Chile’s National Lithium Commission said that it is studying the possibility of public-private partnerships to develop lithium deposits in the country. Where the government would retain an ownership stake in projects, while allowing incoming investors to buy up a share of mineral rights.

That would be a significant departure from current policy. Where concessions for lithium are prohibited by constitutional decree.

Instead, the government has been trying to develop its lithium resources through “resource rent” contracts. Where private firms are granted the right to explore, develop and produce lithium, but do not actually own the mineral reserves they discover.

With that scheme having proven ineffective in moving projects forward, it appears the government is now looking at more conventional arrangements for mining. And that could be a major opportunity.

That’s because Chile is host to the world’s largest identified reserves of lithium. With the nation’s 7.5 million tonnes of in-ground lithium metal being more than double that of the next-largest holder, China.

Chile was also the world’s largest producer of lithium in 2013. Putting out nearly 40% of total world supply.

That scale has in the past attracted attention from some big players. In 2012, for example, Chilean fertilizer giant SQM attempted to develop projects here–but was rebuffed by the complex legal framework surrounding lithium.

With that hurdle now gone, the door may be opened to the mining of these world-leading deposits. Made all the more attractive by the fact that Chile hosts mainly brine-type lithium deposits–which are much more cheap and easy to develop than the hard-rock lithium being produced in other major centres like Australia.

Watch for further announcements on the details of Chile’s public-private investment system for this sector.

Here’s to making it work,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

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