Sociedad Quimica will be reducing water usage by 50% until 2030

Chilean SQM (NYSE: SQM), the world's second largest lithium producer, will voluntarily forego the use of fresh water and brine from the Atacama Desert in order to mitigate the overall impact of its operations in one of the driest places on earth. The company, which makes lithium by pumping brine from the desert's subsurface and concentrating it through evaporation in pools, has committed to reducing its use of "continental" water by 20% starting this November. The goal is to reduce water consumption by 50% by 2030. To achieve these goals, the miner has to improve production processes and increase the consumption of seawater. This will require investments of approximately $ 40 million in the first phase and $ 65 million in the second phase. SQM also vowed to produce carbon-neutral lithium by 2030 as part of a larger $ 100 million emissions reduction initiative. The lithium miner said the announced plan is unlikely to have any impact on its short- or long-term lithium production. "There is no compromise between cost competitiveness and leadership in sustainability," said Chief Executive Ricardo Ramos in the statement. "These are commitments we make out of conviction and voluntarily. SQM is now producing at a record level of around 70,000 tons for the year, which has enabled it to build higher inventory levels ahead of an expected boom in demand. The company's announcement, which is part of a new sustainable development plan, comes after SQM lost a high-profile litigation in Chile. In 2016, the Chilean environmental authority determined that SQM had extracted more brine from the salt surface than was allowed. A $ 25 million compliance plan presented by the company was rejected by an Antofagasta court in December. Despite the company's appeal, in August local regulators forced SQM to restart an environmental compliance plan for the company's operations from scratch. Water has become a bone of contention for the expansion plans of both SQM and its main competitor Albemarle (NYSE: ALB), both of which operate in the Atacama Desert, the world's driest desert, which provides more than a third of the world's lithium carbonate supply. Chile, which owns around 52% of the world's known lithium reserves, lost its crown as the most important lithium producer to Australia in 2018. However, the country is working to reverse this situation. It predicts that lithium will soon become its second largest mining asset after copper. The raw material is currently the fourth largest export item in the country. SQM's own expansion plans are well on the way to being completed by the end of 2021, it said in August. The company expects to extract more lithium from the same amount of pumped brine by using the brine designated for potash production and exploiting higher quality wells. The SQM estimates that Chile would be able to increase its total lithium production by such methods to 300,000 tons of lithium carbonate equivalent from its current capacity of just over 100,000 tons.