Chile will nationalize its lithium industry. The announcement came from Chilean President Gabriel Boric during a televised speech on April 21, 2023.

“This is the best chance we have at transitioning to a sustainable and developed economy. We can’t afford to waste it,” Boric said in an address televised nationwide.

Reuters reported that the move would eventually transfer control of Chile’s lithium operations from industry giants SQM and Albemarle to a separate state-owned company.

Future lithium contracts would only be issued as public-private partnerships with state control, Boric said.

Boric said state-owned Codelco, the world's largest copper producer, will be tasked to find the best way forward for a state-owned lithium company and he would seek approval from Congress for the plan in the second half of the year.

The government would not terminate current contracts, but hoped companies would be open to state participation before they expire, he said, without naming Albemarle and SQM, the world's No.1 and No.2 lithium producers respectively.

SQM's contract is set to expire in 2030 and Albemarle's in 2043.

SQM, formally called Sociedad Quimica Y Minera de Chile, and Albemarle supply Tesla Inc., LG Energy Solution Ltd. and other EV and battery manufacturers.

The move poses a fresh challenge to electric vehicle (EV) manufacturers scrambling to secure battery materials, as more countries look to protect their natural resources. Mexico nationalized its lithium deposits last year, and Indonesia banned exports of nickel ore, a key battery material, in 2020.

Codelco and state miner Enami will be given exploration and extraction contracts in areas where there are now private projects before the national lithium company is formed.

A division will be dedicated to advancing technology to minimize environmental impacts, including favoring direct lithium extraction over evaporation ponds.

“Today we present a national lithium strategy that’s technically solid and ambitious,” the president said, adding it would build “a Chile that distributes wealth we all generate in a more just way.”