Chilean Environmental Agency calms down the lithium markets

The nation, sitting on half of the world's lithium reserves, has a reassuring message for electric car makers: Tighter environmental controls will not jeopardize future production of the metal used to make batteries. The Chilean Environmental Protection Agency is working with other agencies to work out a plan to strengthen supervision of the mining companies that pump hundreds of lithium every second from the brine under the Atacama Salt Flat. Under pressure from investors and customers, miners are already investing millions to reduce their footprint, and they too say that shouldn't limit production. While the main goal is to mitigate the impact on the fragile ecosystem and local communities, the new integrated supervisory approach should not jeopardize production in an era where sustainability is a starting point, said Cristobal de La Maza, who is the SMA well-known agency. Albemarle Corp.'s Chilean expansion plans and local rival SQM are vital to the industry to meet demand, which is expected to triple in the coming years, with lithium being a key ingredient in batteries that power vehicles and phones. "We do not believe that this is something that runs counter to economic interests, although our role is clearly environmental in nature," de La Maza said on Thursday over the phone. "In environmental matters, what was valid for 30 years is no longer acceptable today. The initial response from companies has been positive, he said, adding that they understood that Chile needed to be competitive not only in production but also in environmental standards. On the same day that de La Maza spoke, SQM announced plans to cut brine use in half and produce carbon-neutral lithium by 2030 - without cutting production. This was preceded by a lost legal battle that forced the Santiago-based company to re-engineer a plan to combat brine over-pumping. "This significantly reduces the risk of depletion of the lagoons," said Alonso Barros, a lawyer who works with local communities. Albemarle, the other major operator in a salt flat that houses nearly a quarter of the current global lithium supply, stepped up pumps before doubling production. However, the Charlotte, North Carolina-based company says the higher pumping rates have proven sustainable, with a focus now on data sharing and modeling in collaboration with the authorities. It is also looking for ways to produce more lithium from the same amount of brine and has spent $ 100 million to keep fresh water usage going even after capacity doubles. An expanding lithium industry isn't the only demand in the Atacama Basin, which also powers huge copper mines, indigenous communities, and tourism. The SMA is investigating the BHP Group's Escondida mine because it has allegedly withdrawn more water than allowed for almost 15 years, which Escondida denies. One of the challenges for the regulator is to set common standards for the different users of fresh water and brine in the Atacama Basin. "It creates a unique point of view and does what is best for the ecosystem," said Albemarle's lithium boss Eric Norris in an interview. "That's a lot of what the SMA is focusing on."