SQM, Albemarle shares slide on Chile lithium nationalization plan

Chile, which has the world’s largest lithium reserves, announced a plan to nationalize the business on Friday, sending SQM (SQMA.SN) and Albemarle Corp (ALB.N) shares down.

Chile, the world’s second-largest lithium producer, would switch to a paradigm where the state controls all new lithium projects through a public entity that partners with private mining firms.

Chile’s quest for state ownership is part of a larger lithium nationalism in Latin America, home to the “lithium triangle” and the world’s greatest lithium reserves.

EV makers hunting for battery materials face a new obstacle. In 2020, Indonesia stopped nickel ore exports and Mexico nationalized its lithium reserves.

Chile’s youthful progressive President Gabriel Boric announced late Thursday that the country would not cancel existing contracts but would engage with mining businesses to voluntarily switch to a public-private arrangement.

SQM’s U.S.-listed shares fell 6.2% and Albemarle 2.5% on Friday morning. SQM’s lithium contract in Chile expires in 2030 and Albemarle’s in 2043, shielding it from the shift.

London mining shares plummeted. Rio Tinto (RIO.L) fell as much as 5% to its lowest in in a month and was last down 4.7%. Anglo American (AAL.L) lost 4%, marking the basic resources sector Europe’s worst performer.

Governments in the lithium triangle—Chile, Argentina, and Bolivia—are pressing for a larger public sector participation in metal mining and battery development.

Argentine national energy giant YPF has entered lithium, while Bolivia has tightly controlled its vast, unexplored resources. A Chinese group, including CATL, won a lithium tender.

Mexico’s Andres Manuel Lopez Obrador and Bolivia’s Luis Arce have proposed a lithium “OPEC” to coordinate policy and boost local economies.

“Defending Bolivian lithium is defending the homeland!” This week Bolivia’s Arce tweeted.