A new joint venture established by Chilean metals giant Corporación Nacional del Cobre de Chile (Codelco) and lithium supplier Sociedad Quimica Y Minera De Chile SA (SQM) aims to become the world's largest battery metal producer, banking on low-cost, low-impact output to meet soaring demand. Named NovaAndino Litio, this public-private partnership plans to submit a proposal to regulators next year to increase production at SQM's lithium operations in the Atacama Salt Flat, according to Codelco Chairman Maximo Pacheco, who spoke in Santiago on Monday. Pacheco, who will also serve as the board chairman for the joint venture, declined to provide specific production targets.

This agreement marks Codelco's formal entry into lithium production. Under the terms, the state-owned copper producer will acquire a majority stake in SQM's Chilean lithium business; in exchange, SQM's operational contract will be extended for another 30 years. The two companies aim to deploy new direct extraction technologies to boost output from this, currently the world's largest integrated lithium salt flat operation, while simultaneously reducing its environmental footprint.

"We are witnessing a partnership between Chile's two largest companies—one public, one private—aimed at creating the world's biggest lithium producer and returning Chile to the throne as the world's number one lithium supplier," Pacheco stated. The joint venture between SQM and Codelco is a cornerstone of outgoing President Gabriel Boric's push to expand state control over strategic lithium assets, while also aiming to increase supply to support the global transition away from fossil fuels.

Chile is seeking to reclaim market share lost in recent years to Australia and Argentina. NovaAndino is preparing to expand beyond the current production capacity of approximately 230,000 metric tons per year, just as the global lithium market begins to recover from a prolonged supply glut. Despite a robust demand outlook for electric vehicles and large-scale battery storage, lithium prices remain far below their 2022 peaks and could face pressure from new sources of supply.

By 2030, Codelco will hold a 50% plus one share stake in the joint venture, while SQM will retain operational control until that time. At least one significant obstacle remains. SQM's major shareholder, China's Tianqi Lithium Corporation, is making a final attempt through Chile's Supreme Court to block or suspend certain parts of the partnership. Tianqi has consistently argued that the transaction should have been put to a shareholder vote.

Last month, China's antitrust regulator conditionally approved the partnership, requiring the two companies to honor existing contracts and continue supplying Chinese customers on a "fair, reasonable, and non-discriminatory" basis. Albemarle Corporation, another producer in Chile, has historically been the world's largest lithium supplier. In recent years, diversified miner Rio Tinto Group has also become a significant player in the field, while China's Ganfeng Lithium and Tianqi Lithium have built substantial global production capacity.