Chilean Court Suspends BYD’s Lithium Extraction Contract

On January 14, local time, a Chilean court said that it had decided to accept the appeal and suspend the bidding for the national lithium mine issued two days ago, on the grounds that the bidding process was in doubt.

According to AFP, the mining contract was suspended because of an appeal for protection filed by the governor of Copiapo, Miguel Vargas, together with a group of Aymara and Diaguita Indigenous communities that inhabit a salt flat in the Atacama desert. They believe that this bidding violates the principles of environmental protection and economic development.

The Court of Copiapo said that due to the dispute over the bidding, the bidding and authorization for lithium mining will be temporarily suspended. The mining ministry said the tender has not been the subject of a “definitive cancellation” and that the process had been “open, informed, transparent and has complied with all current legislation.”

Previously, the Chilean government bid for the domestic production quota of about 400,000 tons of lithium metal in October 2021, which was divided into five portions,, each of which was 80,000 tons. A total of five companies participated in the bidding. Among them, BYD won the bid with the highest price of $61 million. A local Chilean company bid $60 million and also won the bid.

American company, Albemarle, and Chilean companies, SQM and Cosayach Caliche, failed to win the bid because their bids were too low.

Ping An Securities pointed out that Chilean salt flats have a high endowment of lithium resources and is one of the major suppliers of lithium resources in the world, accounting for 22% of the global lithium mine production in 2020. Any events regarding the flats can have significant impact on the global lithium mine supply.

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According to the US Geological Survey, the proven lithium reserves in the world in 2020 were about 21 million tons, of which Chile’s lithium reserves were 9.2 million tons, accounting for about 44% of the proven reserves in the world, ranking first in the world.