Important Facts in the Lithium Industry IN CHILE

Transcription

1 Important Facts in the Lithium Industry IN CHILE

2 CONTENTS Context Lithium regulation in Chile The Chilean National Lithium Commission(2014) Lithium and Governance Policy (2016) Short, Medium and Long-term Proposals Lithium Value Added Integration Opportunities in Chile

3 CONTEXT Chile and its minerals Copper 1 Rhenium 1 Natural Nitrates 1 Iodo 1 Lithium Cabonate 2 Molybdenum 2 Boron 3 Silver 4 Lith Worth Market Worth Reserves Share Share Copper 28% 29% Rhenium 55% 52% Natural Nitrates 100% ND Lithium Carbonate 34% 54% Iodo 66% 24% Molybdenum 23% 12% Boron 5% 9% Silver 6% 14% Fuente: en base a datos de la USGS

4 CONTEXT Lithium reserves in Chile According to USGS (2017) worlwide Lithium reserves are 14,0 million tons. Salar de Atacama reserves are about 7,5 million tons (40 millions LCE) making Chile the richest country in economical proven reserves. Currently, Salar de Atacama is the only brine deposit being exploited in Chile. Worldwide Lithium Reserves 1% 22% 52% 14% 11% Fuente: USGS Argentina Australia Chile China Others

5 CONTEXT Chilean lithium exports Lithium Carbonate Lithium Hydroxide Lithium Chloride Brine USD 302 Millions USD 589 Millions 2016 Chilean exports are about 40% of worldwide Lithium market share (Chile: 79,500 tons LCE).

6 CONTEXT Lithium Resource Potential: Chile s salt flats or basins. Chile has more than 50 closed salt flats or basins. Andean salt flats total area: 357 km 2. Average area: 51 km 2.

7 CONTEXT Lithium market share woldwide (lithium supply) Albemarle 17% SQM 25% CHINA (Others, not including Tianqui-Talison) 14% Tianqi 51% Albermarle 49% 24% 9% Others 11% LCE: Lithium Carbonate Equivalent

8 LITHIUM REGULATION IN CHILE The Chilean Constitutional Organic Law for Mining Concessions (1983) Minerals Concessionable All other minerals, including Thorium and Uranium. Minerals with "strategic value". Nonconcessionable Hydrocarbons (liquid / gaseous) Lithium According its location Who can exploit these resources? State Companies / Special Operating Contracts (CEOL) / Administrative Concessions Why? The D.L. Nº 2886/1979 established the lithium as strategic resource. Constitution of the Republic, article 19 No. 24, paragraphs 6 to 10 (the property right on a mining concession is constitutionally protected); Constitutional Organic Law No. 18,097 on Mining Concessions (of 21 January 1982); Mining code (Law No. 18,248 of 14 October 1983); and Regulations of the Mining code (of 27 February 1987).

9 LITHIUM REGULATION IN CHILE Chilean Nuclear Energy Commission (CCHEN, 1965) Lithium could not be extracted/produced and commercialized without direct approval of CCHEN Thorium / Uranium First purchase option is for the Chilean Government Lithium Legal acts: require authorization by Chilean Nuclear Energy Commission (CCHEN)

10 THE CHILEAN NATIONAL LITHIUM COMMISSION(2014) Generating a lithium national policy: diagnostic and proposal Role of the Government should be strengthen Focus in the brines and the substances contained in it, not only in lithium Closed salt flats or basins: extremely fragile and Complex Ecosystem Lithium considered as a strategic mineral

11 LITHIUM AND GOVERNANCE POLICY (2016) On January 26th 2016, President Michelle Bachelet announced a new Policy regarding Lithium and Salt flats. Aiming to an integrated salt flats governance, starting point to sites explorations and resource exploitation. In need of developing technological capabilities to safeguard the salt flats sustainability and into value added products.

12 SHORT, MEDIUM AND LONG-TERM PROPOSALS Short term Reviewing CORFO Contracts: Albenarme and SQM. CODELCO: development projects in Maricunga and Perdernales salt flats. Creation of the CORFO Non-Metallic Mining and Governance Committee. Medium and long-term Public-private partnerships and welcome private investment. Local and indigenes Communities: considering the shared value concept. Developing technological capabilities to safeguard salt flats sustainability. Creating the conditions and incentives for developing more added value to the Country, not only extractive industry. Reinforcing public institutions. Promoting research, innovation and technological development.

13 SHORT, MEDIUM AND LONG-TERM PROPOSALS Contract modification between CORFO and Albemarle November 2016, Albemarle and CORFO signed a contract modification. Relevant aspects of the contract: Construction of new plant for battery grade lithium carbonate (Plant 3). Fixed a new extractive lithium quote ( tons Li). Establish a 27 years for the expiration of exploitation rights ( ). Defines royalties payments: marginal rates on the income depending on the prices. Option to build a lithium hydroxide plant grade (5,000 tons.). Set preferential prices for lithium products that reach up to 25% of annual theoretical production capacity, to domestic producers. Obligation of an annual contribution for R&D. Look after that local communities benefit from the exploitation of the resource: shared value.

14 SHORT, MEDIUM AND LONG-TERM PROPOSALS Contract modification Albemarle - CORFO Impact in the Chilean Lithium Market (conservative analysis)

15 SHORT, MEDIUM AND LONG-TERM PROPOSALS CODELCO: development projects in Maricunga and Perdernales salt flats In 2017, CODELCO created a new subsidiary (Salar de Maricunga SpA) for developing, constructing and operating new lithium production facilities. In 2016 CODELCO initiated a search for a strategic partner to exploit the mineral in the Maricunga and Pedernales salt flat, which should be finalized during The call for intention of interest, it is in evaluation now. CCHEN has gave the permission to exploit lithium. CODELCO it is processing the CEOL with the Mining Ministry.

16 SHORT, MEDIUM AND LONG-TERM PROPOSALS CORFO Non-Metallic Mining and Governance Committee Endowing resources (infrastructure, professionals,...) to the Committee ENVIRONMENT ECONOMIC SOCIAL Ensure environmental sustainability of closed salt flats / basins / highaltitude wetlands Optimize the Salar de Atacama exploition Developing added value for lithium industry Promote R&D for the sustainable development of other salt flats Local development - intergeneration shared value - Developing an adequate institutionally for compliance sustainability

17 Lithium Value Added Integration Opportunities IN CHILE

18 CHILEAN LITHIUM CALL CORFO & INVESTCHILE PROGRAMS IFI, Integrated Development Initiatives - PRAP, Pre-Investment Support Program - Guarantee - R & D Tax Incentive - Subsidies for Innovation - Competitiveness Training Program - - Promotion - Investor Assistance - Aftercare CORFO Albemarle Contract Preferred lithium prices Supply assurance

19 ESPECIALIZED PRODUCERS CALL INVITATION

20 CALL Company s selection procedure A Applying B Prequalification C Proyects enhancement Letter of Interest Time limit: June 30th, 2017 Road Show, Frankfurt Germany May 18th, 2017 Selection of companies Eligibility criteria: Production experience Tecnological capabilities Market experience Environmental trackrecord Financial solvency Prequalified companies notification Q&A process with prequalified companies only 90 days to project presentation Criteria: Value added per lithium unit Technological sophistication Local human resources

21 THANKS