Chile awarded two lithium extraction contracts worth a total of $121 million to Chinese EV maker BYD and Chile’s Servicios y Operaciones Mineras del Norte, the minerals ministry said on Wednesday. The two companies would be awarded the right to extract 80,000 tonnes of lithium each.
In October 2021, Chile announced that it would provide five lithium extraction quotas of 80,000 tons to local and overseas companies. The successful bidder will receive 7 years of exploration and 20 years of production rights. BYD offered $61 million and Servicios y Operaciones bid $60 million for quotas to produce 80,000 metric tons of lithium.
Prior to this, Chile only allowed domestic enterprises to participate in the development of its lithium supplies. BYD becomes the first Chinese enterprise to share the lucrative project in Chile.
Obtaining the production quota will also ease the pressure on BYD brought by the price increase of raw materials.
From December 2021, the price of lithium carbonate increased to 280,000 yuan per ton, up 410% year-on-year. Some battery factories have received quotations as high as 350,000 yuan/ton, setting a record high.
The accelerated development of new energy vehicles in the world has largely driven demand in the battery industry chain. As a result, battery factories worldwide are building new projects, but the supply they can offer is still lagging industry demand.