Codelco is fine tuning entry into lithium business and looking for operating partner
26-Nov-2012 Diario Financiero – News
Decision expected for the first quarter next year
Codelco is fine tuning entry into lithium business and looking for operating partner
The state-owned company is analyzing a short list that includes Sumitomo, FMC Lithium and a Chinese company
Codelco has decided to enter the lithium business and as its CEO, Thomas Keller, indicated after signing the agreement with Anglo American for Los Bronces issue, the lithium business will be a joint venture. Some sources close to the operation have said that the state-owned company has already started to look for an operating partner and that a short list is being handled where at least three of main actors in lithium business are included, i.e. FMC Lithium, Sumitomo and a Chinese company.
The decision is to be made during the first quarter next year or during the first days of April as reported by some sources close to the operation.
Notwithstanding Codelco already has the mining business know-how they want to entrust exploration and exploitation of lithium to a partner in order the state-owned company continues focusing on doing what they know to do: copper mining.
Although Maricunga reserves have not been specified, some experts state the whole salt flat would gather 1,790,000 lithium tons.
Other options
In any case, the mining company is not only considering adding an operating partner for exploration and exploitation of the salt flat but also to add a third party to develop the processing plant.
Sources from the industry indicate this is a measure with “economic sense” because the extraction volume the corporation would have is not justified to implement a plant by themselves alone. In fact, same sources indicate that Codelco is having conversations with Taiwanese Simbalik – also having some mining concessions in Maricunga – for an eventual joint-venture contemplating a common operator and a common joint-developed plant.
Sources from the industry estimate the plant cost to be between US$300-US$400 million and would be financed 30% equity and 70% debt as it is the common practice for this kind of operations.
Some experts consider that the salt flat could start being worked about three years after closing an agreement with an operator, once boring works, mineral analysis and construction of the first stage of pilot plant are completed,
The salt flat
The Maricunga Salt Flat is located 170 km from Copiapó and is the second largest in Chile after Atacama (operated by SQM). Only two companies have been granted concessions in that location: Codelco and Simbalik, the latter obtained an unprecedented permit from CCHEN (Chilean Commission of Nuclear Energy) for producing and selling lithium salts and although Decree 2.886 dated 1979 states that lithium is a State-owned reserve not subject to be exploited through a mining concession, Taiwanese facilities had been built before the Decree enforcement which makes the regulation inapplicable to Simbalik.
Simplex project includes 1,350 ha where an approximate annual production of 35,000 tons of lithium carbonate and 80,000 tons of potassium chloride may be obtained. Kevin Penn, CEO of the company had previously stated to Diario Financiero that they expect to start exploration stage to start lithium carbonate extraction in about 4 to 6 years.
