That said, the country doesn't just have lithium – it actually contains more than half of the world's lithium reserves. Lithium, of course, is the primary ingredient in lithium batteries – which are used in laptops and mobile phones, as well as electric cars and even power storage facilities. These days, lithium is at the forefront of the quest for renewable energy, with demands expected to double by 2025.
One area in Chile stands out, in particular – the Salar de Atacama. It's home to the world's richest lithium deposits, with some calling it the highest grade salar (salt flats) in the world.
It's a goldmine, and the government knows it – which is why it signed over lithium concession to SQM in January. This move will allow the company to lift its production capacity to 216,000 metric tons per year by 2025, claiming back its place as the top producer of lithium in the market and potentially disrupting supply models with plans to manufacture batteries domestically.
A controversial deal
Not everyone is on board with the agreement, particularly environmentalists and mining unions, who have launched demonstrations against it in Santiago, the nation's capital. Protestors carried placards that read, "Lithium for Chile, not for Soquimich" – the company's name during the time it was a state-owned company.
To note, SQM has always been dogged in controversy: It was privatized during the time of the dictator Augusto Pinochet, and members of his family still own shares in the company. This has been compounded with accusations of corruption and violations of multiple environmental regulations. Just recently, SQM is in the middle of another dispute – one that involves Pablo Longueira, the former economics minister of Chile, embattled with accusations of taking illegal payments from the company to modify water regulations to favor the lithium industry.
Long-term environmental impact
In a report on LithiumMine.com, it indicated that for lithium extraction, at least two-thirds of the area's fresh drinking water is used.
Interestingly, Chile is the only country in the world to have wholly privatized water resource and management, with the rights around Salar de Atacama all owned by SQM. Environmentalists have said that the company has exploited water around the area for lithium production.
This has a direct impact on the environment around it: Salar de Atacama is one of the driest places on earth, and lithium extraction has depleted the water reserves of the region – sinking groundwater tables, drying out rivers, streams, and wetlands which contain vulnerable wildlife.
It also deprives its native residents, most of whom are indigenous, of water – as well as their right to be involved in projects that interfere with their land. "The company steals our water," said Ana Ramos, president of the Council of Indigenous Peoples of Atacameños, in an interview with German broadcaster Deutsche Welle. "The contract violates our territorial and environmental rights enshrined in international agreements."
Indeed, with the ambitions of the government to increase lithium outputs for the next decade, coupled with the SQM's dubious track record in environmental regulation and growing global demands – it's dangerously close to being a perfect storm.
Where that will leave the picturesque salt flats of Chile is anybody's guess at this point. (Related: Is it possible to recycle lithium ion batteries?)
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