Chile Details Its National Lithium Strategy

Welcome back to Foreign Policy’s Latin America Brief.

The highlights this week: Chile releases a comprehensive national lithium strategy, Brazil’s former President Jair Bolsonaro goes on trial, and Buenos Aires experiences a counterintuitive restaurant boom.

When Chilean President Gabriel Boric announced preliminary plans for a national lithium strategy in April—one that would increase government participation in the lucrative sector—details were scarce. Investors gained some clarity last week when the Chilean government released a 33-page document that expands upon its initial pledges with specific timelines and targets. Chile is currently the world’s second-largest producer of lithium, a critical mineral that is used in electric car batteries and key to the global green energy transition.

Currently, only two companies mine lithium in Chile: Chilean firm SQM, which is nearly a quarter-owned by a Chinese company, and U.S. firm Albemarle. They are both private and operate in the largest of the country’s more than 40 salt flats that are home to lithium reserves. Although the government in Santiago, the capital, has been slow to grant permissions for lithium mining in the past, the new strategy says the government plans to award more mining leases and will require some of the new projects to be joint partnerships with a state-owned company.

Boric does not seek a full-blown nationalization of Chile’s lithium sector, but he does aim to create a state lithium mining company with a significant stake in the industry. Creating the company would require a higher level of congressional support than he has enjoyed so far. In the meantime, Boric has delegated state copper firm Codelco and state mining firm ENAMI to represent the government’s share of lithium ventures. As one of the first actions in the national lithium strategy, Codelco is seeking to renegotiate the country’s existing leases with SQM and Albemarle. Those expire in 2030 and 2043, respectively.

The renegotiations could allow the companies to extend their rights to mine in the lithium-rich salt flat into the future in exchange for allowing a state mining firm to own part of their projects. For future contracts in salt flats that Chile dubs “strategic,” the government aims to have a controlling stake in production. SQM and Codelco began their talks this month, while Albemarle has said it expects to start before the end of the year.

According to the strategy, Chile’s state-owned companies will begin new mining activities this year in salt flats where various firms have been performing feasibility studies. In the first half of 2024, the government will start awarding new mining permissions to private companies as part of a “public, transparent, and competitive” process. Contracts will be awarded based on how firms pledge to not just mine but also develop the local lithium industry. Currently, most of the world’s lithium processing—which turns the dusty white mineral into a substance that can be used in batteries—occurs in China.

As an example of the kind of contribution Santiago seeks, the strategy mentioned a recent contract awarded to Chinese firm BYD to build a processing plant in Chile in exchange for guaranteed access to raw Chilean lithium at a reduced price. The European Union appears to be taking note of Chile’s goals: European Commission President Ursula von der Leyen announced on a trip to Chile last week that the EU plans to sign a deal on value-added lithium projects in the country. The Chilean government also said it would establish a research institute for the study of lithium.

Chile is not the only lithium-producing country to take steps to bolster its domestic industry. On Tuesday, Australia announced its own critical minerals strategy, which aims to channel investments in the sector into local jobs.

The government of one of Chile’s neighbors, Argentina—itself home to the world’s second-largest lithium reserves—says it will soon send a bill to Congress with a national lithium strategy that is partially inspired by the Chilean model, Ámbito Financiero reported. That would represent a significant shift for Buenos Aires, which has quickly awarded mining permits to private miners in recent years and seen production boom. Between February 2022 and February 2023, Argentina added around 1,400 jobs in the lithium sector, the government estimated.

Unlike in Chile, lithium rights in Argentina are controlled by provincial governments. That may be part of the reason why plans for an Argentine lithium strategy do not foresee the creation of a state-owned company, Ámbito reported. Instead, the draft bill reportedly includes a requirement that a portion of lithium mined in Argentina be set aside for local processing and other applications in a domestic lithium industry, similar to the Chile-BYD deal.

Argentina’s privatized lithium sector is currently on a much higher growth trajectory than Chile’s. A Chilean government estimate last month projected that Argentina’s national production would outpace Chile’s by 2035. The new leases promised in Chile’s lithium strategy aim to speed things up.

But whether the national lithium strategy is successful will depend on more than just total output of the mineral, lithium expert Gustavo Lagos told El País in a recent interview.

Ideally, the blueprint would allow Chile’s state companies to become more capable and yield broader returns for the country: “If a deal is reached between Codelco and SQM, it is an enormous triumph for this government,” Lagos said. “It would be part of Boric’s legacy.”

Friday, June 23: The Organization of American States wraps up its annual assembly in Washington. 

Sunday, June 25: Guatemala holds general elections.

Monday, July 3 to Tuesday, July 4: Argentina hosts a summit for leaders of the Mercosur customs union.

Ecuador’s snap elections. A crowded field of candidates has emerged ahead of Ecuador’s snap general elections this August. Conservative incumbent President Guillermo Lasso triggered the vote after he dissolved Congress in May, but he is not running for reelection.

While widespread polling has not been conducted so far, the left-wing movement of former President Rafael Correa is likely to be strong after it performed well in recent local elections. The Correísmo movement has endorsed former congresswoman Luisa González as its candidate.

Indigenous activist Yaku Pérez—who nearly made the presidential runoff in the 2021 presidential election—is running again. A third candidate who has garnered media attention is the right-wing Jan Topic, whom Lasso considered as a potential security secretary.

Former Brazilian President Jair Bolsonaro speaks to the press as he leaves the Federal Senate in Brasília, Brazil, on June 21.Evaristo Sa/AFP via Getty Images

Bolsonaro’s trial. Brazil’s election court on Thursday began a trial that could see former President Jair Bolsonaro ineligible to run for office for eight years. He is charged with abusing his presidential authority to spread false information about the integrity of Brazil’s voting system. Specifically, the charges focus on a televised event last July when Bolsonaro invited foreign diplomats to a meeting where he cast doubt on the reliability of voting machines.

The speed of Bolsonaro’s trial, which could be resolved by the end of the month, contrasts with the lag in any kind of election-related charges moving forward against former U.S. President Donald Trump, on whom Bolsonaro modeled his election denial. The Washington Post reported this week that U.S. authorities’ delay in advancing inquiries into Trump’s personal role in the Jan. 6, 2021, U.S. Capitol insurrection was due to a mix of “a wariness about appearing partisan, institutional caution, and clashes over how much evidence was sufficient.”

Bolsonaro is being investigated in several other inquiries, including one that accuses him of inciting the Jan. 8 riot in Brasília, the country’s capital.

Buenos Aires restaurant boom. Argentina’s towering inflation has prompted middle- and upper-class residents to try to spend their Argentine pesos as quickly as possible before the currency loses even more value. Somewhat counterintuitively, these dire economic straits have led to a restaurant boom in Buenos Aires, as fine dining becomes a luxury item of choice for Argentines to burn their cash. Restaurateurs are opening creative new establishments, and venues are packed throughout the week, the New York Times reported.

The logo of Venezuela’s National Electoral Council (CNE) is seen at its headquarters in Caracas on June 15.Federico Parra/AFP via Getty Images

Over the course of Venezuelan President Nicolás Maduro’s time in power, government loyalists have come to overwhelmingly dominate many of country’s decision-making bodies. A rare exception was the National Electoral Council (CNE), which oversees the planning for and execution of elections. After two opposition-linked members were named to the body in 2021, it supervised regional elections in 2021 and a 2022 runoff that delivered an opposition victory in the birthplace of former President Hugo Chávez.

The CNE’s credibility was key to opposition parties’ organizing ahead of upcoming primary elections and a presidential vote in 2024. But last week, government loyalists on the council abruptly resigned, and—unsure of what kind of shakeup may yet come—the opposition members followed.

The CNE’s dissolution was “truly tragic,” Institute of Higher Studies of Administration professor Michael Penfold tweeted, citing the body’s facilitation of the 2021 vote. He called the elections Venezuela’s first internationally validated in over a decade, despite some irregularities.

It is not immediately clear how new CNE members will be chosen. Penfold read the rupture as an attempt to divide Venezuela’s opposition and hamper international efforts for free elections in the country.

Following the news, prominent figures in Venezuela’s opposition announced they would self-fund and self-organize their presidential primaries, pushing ahead with a timeline similar to the one they had originally planned. Opposition candidates are required to register to compete by Saturday.

The CNE’s dissolution has become a new obstacle in the international push for free and fair elections next year. Participants in a recent global conference on Venezuela’s crisis called for the Maduro administration to announce a timeline for the vote, with Washington mentioning potential sanctions relief as an incentive. Now, the composition of “any new CNE will have to be negotiated with the opposition to be credible internationally,” Atlantic Council Fellow Geoff Ramsey tweeted.