2023-04-24 20:59:00
The Chilean government’s plan to require a controlling stake in all future lithium projects will discourage investment and risk stalling the transition to clean energy, according to Canadian mining billionaire Robert Friedland.
The announcement, which on Friday sparked a sharp drop in share prices of Chilean lithium companiesit would be “quite complicated for international capital, and it makes it more difficult to invest in Chile,” the president of Ivanhoe Mines Ltd. said in an interview.
“Money is a coward, flee at the first sign of trouble.” Demand for lithium, a key ingredient in electric vehicle batteries, will skyrocket in the coming decades as automakers phase out gasoline and diesel-powered models. Chile is the world’s second largest producer of the metal and President Gabriel Boric calls for the state to play a bigger role in the sector, while trying to create a national processing industry and protect the environment.
Elon Musk is not concerned about lithium regulations in Chile, the world’s largest producer
The policy bears some similarities to what Indonesian President Joko Widodo is trying to do with nickel in that country.
The Chilean measure will harm the country’s reputation as one of the safest places in Latin America for foreign investors and amounts to a “nationalization” of its lithium sector, Friedland said. The mining magnate has been involved in the development of some of the world’s largest copper deposits, including Oyu Tolgoi in Mongolia and Kamoa-Kakula in the Democratic Republic of Congo.
Investments and Government
It is “likely to push the government back a lot, preventing companies like Rio Tinto, Teck and BHP from entering there and investing”Friedland said. “This will not end well, in my opinion.”
Governments are inefficient minersand it was “much more efficient” to encourage the private sector to invest, he said, adding that there is a risk that “ill-conceived” nationalist policies would thwart the transition to clean energy.
This new policy comes as proposed mining royalty increases in Chile, social unrest in Peru and the threat of tax increases in Panama have delayed copper projects in those countries and scared off investors. Copper, like lithium, is a fundamental component in clean energy applications, and Chile and Peru are the world’s number 1 and 2 producers of the red metal.
LM CP
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