A seismic transformation is underway at the Salar de Atacama. Reducing brine extraction and water consumption by 50% has become the number one priority while increasing production by 60%. Billions of dollars will be invested over the next decade to achieve this.

Since 2022 SQM have been revising their entire future development plan for the Salar de Atacama under what is known as the Salar Futuro Project.

Salar Futuro is a very ambitious undertaking to drastically reduce brine extraction from Atacama while increasing production from 190,000 tpa LCE in 2024 to 300,000 tpa LCE in the 2030s. SQM indicate they will invest over US$3 billion in DLE, desalination and advanced evaporation and water recovery technologies to increase production while halving current brine extraction rates.

In May 2023 the Chilean Government caused widespread controversy by announcing a National Lithium Strategy to bring all lithium production in the country under public-private partnerships. It was reported in the press as a nationalisation, causing alarm in the EV and battery industry. The reality is much less dramatic.

SQM had already been planning the transition for when their concession ends in 2030 and foresaw closer cooperation with one of the state copper mining companies. Under the new arrangement, in 2025 they will merge their Atacama operations with a Codelco subsidiary called Minera Tarar to form a new 50:50 JV. This will enable SQM to effectively continue extracting lithium until 2060, whereas otherwise they would have had to sell their assets to Codelco and withdraw from lithium production in 2030.

It has not been widely reported that before the new public:private partnership was announced in 2023, SQM intended to reduce lithium production and increase potassium chloride (KCl) production in the final years of their concession, to optimise lithium and potassium volumes under their allowed quota. This would have meant “that by the end of 2030, the production system together with the pits and wells would not be suitable for lithium production”. Codelco would then have had to restart production themselves with lithium production not coming on-stream again until 2034.

However with the Codelco – SQM agreement, SQM now intend to do the opposite: to increase lithium production during the six year transition period (2025 – 2030) and sacrifice KCl production.

The EV industry does not appear to have generally realised what was originally going to happen to the world’s second largest source of lithium supply from 2027 – 2034. Lithium production from Atacama was set to decrease and then cease altogether for at least three years.

It is also not widely appreciated that the two lithium producers on the Salar de Atacama, SQM and Albemarle, already pay significant royalties to the Chilean Government. Lithium has been classified as a strategic mineral in Chile since 1979 and officially belongs to the state. In 2022, SQM paid US$3 B in royalties to the Government. Royalties are calculated on a sliding scale that was drawn up in the 1990s. When lithium carbonate prices exceed $10,000 per tonne, SQM and Albemarle have to pay the State a royalty of 40% of the final selling price. The Atacama mine is therefore already in effect a profit sharing operation with the Chilean State.

We conclude the report section on the SQM Salar de Atacama operation by stating that “Lithium production at the Salar de Atacama is in the middle of a seismic transformation”. That transformation also applies to Albemarle, who are equally affected by the brine-flow reduction imperatives that are driving the industrial transformation of SQM’s lithium operations. Albemarle’s project is called the “Salar Yield Improvement Program” and contains essentially the same elements as SQM’s Salar Futuro.

You can read a detailed analysis of the transformation underway at the Salar de Atacama in “The Lithium Report: The Next 10 Years, 2025 – 2035”.