Is it all for naught, to swim so hard only to die on the shore? The challenges in developing lithium resources.

The development of new lithium projects in Chile has not been without its difficulties. As is well known, this mineral has a special regulation after being considered a strategic substance, not subject to concessions, in the late 1970s. Consequently, the approval of new projects requires a very different process than that of other minerals. According to what is established in the Political Constitution of the Republic for this type of substance, various governments have attempted, with varying degrees of success, to promote new developments through special lithium operation contracts (CEOL). During the administrations of President Piñera, attempts were made to assign CEOL through bidding to the highest bidder. This approach of letting the market decide failed in its two attempts, first due to the award to a company with legal disputes with the State (2012), and then because it did not adequately consider potential impacts on indigenous communities or the territorial legitimacy of the assignment (2021). For their part, the center-left governments opted to develop a strategy that would order and project the development of the lithium industry. During Bachelet's second term, the National Lithium Commission was created, whose recommendations were later incorporated into the National Lithium Strategy (ENL) of President Boric, a strategy that proposed a route for the assignment of new CEOLs. It is important to note a key point: the definition of lithium as a strategic substance in 1979 was not accompanied by regulations that addressed conflicts between owners of mining rights on substances subject to concessions and third parties interested in exploiting lithium in the same territories, a situation that was later not addressed by the constitutional organic law on mining concessions. In practice, this gives the holders of mining rights de facto power to block projects, even when a company has obtained a CEOL. While the ENL identifies bidding for CEOLs as a possible alternative, provided it guarantees territorial legitimacy and proper relationships with indigenous communities, bidding does not solve the problem of overlap with mining rights and opens the door to speculation, putting the process at risk. The administration of President Boric then opted for the direct assignment of CEOLs through an abbreviated process. Simply put, if an interested party came to the government with the problem of overlap resolved, they could access a direct assignment, avoiding the bidding process. The process implemented was the result of years of technical analysis at the Ministry of Mining, which had specialized teams dedicated to this issue. Far from being arbitrary decisions, the processes prior to the assignment included a mechanism for expressions of interest, in addition to the presentation of technical, financial, and strategic information, which made it possible to build a comparative basis and provide technical and economic rationality to the selection. The Ministry of Mining not only evaluated information, but also acted within a political-strategic framework defined by the ENL, prioritizing salt flats, establishing conditions, and promoting the territorial dialogue necessary to legitimize the process. The process was advancing coherently. The government had proposed a solution to the conflict between CEOLs and mining rights; the private sector responded by resolving that obstacle and demonstrating technical and financial capabilities. Finally, it seemed that the much-needed legal certainty was being consolidated... until the Comptroller General of the Republic decided not to approve the assignment decrees and object to the direct treatment mechanism used. The extrapolation of principles of public procurement to a regime of non-concessionable substances is, at the very least, debatable. The Constitution itself establishes that these substances have a special status, from which it can be inferred that they are not necessarily subject to traditional bidding or public procurement practices. The Comptroller's decision, and the arguments that support it, undermine the legal certainty that was so hard-won and threaten to undo years of work. It is to be hoped that the current administration will insist with the Comptroller's Office to resolve the assignment of these contracts. Otherwise, there will be nothing left to do but lament having swum so far, only to finally drown on the shore. By Willy Kracht, Associate Professor, University of Chile, former Deputy Minister of Mining. NEWSLETTER Opinion Saturday, AM Conflicting ideas, opposing viewpoints, and a clear analysis: elements to reveal the issues that divide opinions and will shape the agenda. By subscribing, you are accepting the Terms and Conditions and the Privacy Policies of La Tercera.