Chile’s lithium mining giant, Sociedad Química y Minera de Chile S. A (NYSE:SQM), has suspended operations at the Atacama salt flat due to widespread protests by the indigenous Toconao community. About 500 protesters have blocked six different spots on public roads in the southern area of the salt flat, disrupting the movement of workers and mining equipment. Local groups are demanding to be included in talks between SQM and the government, claiming they were sidelined in a recent agreement between SQM and state-run copper firm Codelco. Chile is home to the world’s largest lithium reserves, 90% of which are in the Atacama desert.
Chile’s President Gabriel Boric has unveiled plans to nationalize the country’s lithium sector in a bid to boost the economy and protect biodiversity. Boric has pledged to achieve this by pioneering environmentally-friendly technology and engaging personally in talks with local Indigenous communities. He envisions expanding mining with public-private partnerships controlled by a new state lithium company. The Chilean government has opened negotiations with SQM for state control and plans to do so with Albemarle before its contract expires in 2043.
However, local communities living around the salt flats are skeptical and proving harder to work with. Some community leaders are demanding more profits be channeled their way, while others are strongly opposed to any new lithium mining within their lands. Francisco Mondaca, head of the environmental unit of the Atacama Indigenous Council, has told Reuters, “We’re in the most arid desert and to exchange what we have in water and vegetation for a lithium battery is going to leave us with nothing.”
Cristian Espindola, a Toconao security officer on the Tara flat, has told Reuters, “The Chilean government starts selling this lithium without asking us native people, the people who live here, the homeowners, the Lickan Antay people. This method of the Chilean state dealing with native communities never changes. When they want to install new mining operations, they roll over communities.”
Since 2017, Albemarle Corp. (NYSE:ALB) has given 3.5% of its sales each year to the Atacama Indigenous Council, divided evenly among the 18 member communities. This has frequently led to disagreements, with some communities now planning to hold individual negotiations with the government, bypassing the council altogether. SQM has already adopted this model, striking individual deals with communities closest to its operations.
Disruptions by local communities are becoming increasingly common in Latin America’s energy sector. Last month, Ecuador’s state-run oil company, Petroecuador, declared force majeure on three oil blocks following protests by the indigenous Kichwa community. The community has accused Petroecuador of breaching agreements, though the company says it’s open to dialogue.
This comes as yet another blow to Ecuador’s beleaguered oil and gas sector. Last year, Ecuador’s energy minister Fernando Santos revealed that fuel imports have now surpassed exports for the first time in more than 50 years. And, it’s becoming increasingly difficult to drill for more oil. Last year, Ecuadorians voted against drilling for oil in Yasuni National Park, home to the Tagaeri and Taromenani who live in self-isolation. Ecuadorian President Guillermo Lasso has been desperately trying to advocate for oil drilling in Yasuni in a bid to boost the country’s flagging oil exports. Unfortunately, last year’s referendum means that Petroecuador will have to look elsewhere. S&P Global has projected that Ecuador’s crude production will grow slightly to 510,000 b/d in the current year before gradually declining.
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