Chile’s government exercises exclusive property rights over lithium through Decree 2886 (1979). This means that state institutions—particularly the Corporación de Fomento de la Producción (Production Promotion Corporation), known as CORFO—largely set the conditions under which private companies operate in the salt flats. 61 In 1979, following the lead of the United States, the Chilean government under the dictatorship of Augusto Pinochet declared lithium a “strategic mineral” and took steps to safeguard long-term reserves by limiting production through quotas that are verified by Chile’s Nuclear Commission. From the 1980s to today, only two private/ public contracts have existed with CORFO: one with the Chilean company Sociedad Quimica y Minera de Chile, commonly referred to as SQM, and one with the U.S. company Albemarle, the latest owner in a long chain of corporate sales.62 Chile is the leading producer of lithium from brines, and the government’s goal has been to further develop ‘value-added’ lithium products that can be used in batteries, not just be a supplier of the raw material.63 It expects that these two companies’ operations in the Atacama Salt Flat can meet 40 percent of world demand.64

However, as demand for lithium has grown since 2008, the Chilean government has struggled to increase production and retain Chile’s market leadership. The murky way lithium is addressed in law, combined with corruption scandals and public opposition, has complicated these efforts. In 2012 the government had to cancel a new lithium concession (an agreement for land access and extraction) after it was accused of unfairly privileging SQM, which was shortly thereafter discovered to be making kickback payments to politicians in all the mainstream political parties.65

At the same time, Chileans from different sectors—especially university students and frontline communities—began to question the social benefits of mining.66 It is worth noting that in Chile, the companies are obligated to provide some benefits to the government. For example, SQM’s contract with CORFO requires the company to pay royalties and sell up to 25 percent of its production to Chilean businesses in an effort to develop a local value-added supply chain.67

However, critics have challenged the government to demand higher payments from the mining companies to improve the flow of money to frontline communities and to take the environmental harms of lithium mining seriously.68 A government-appointed committee in 2015 largely validated these concerns, though government action to address them has been slow.69 Since then, no new projects have been approved, although SQM and Albemarle’s operations have expanded significantly despite myriad corruption scandals and controversies over data transparency (see Community Highlight 1 on page 7 for more details on benefit-sharing agreements the government reached with each company).

As Chile entered a two-year period of constitutional reform after a series of protests about the country’s deep inequality that began in late 2019, lithium policy could be revised to allow the state to extract and commercialize lithium directly so as to increase government revenues from lithium, which could then (in theory) be more equitably distributed.

NRDC: EXHAUSTED - HOW WE CAN STOP LITHIUM MINING FROM DEPLETING WATER RESOURCES, DRAINING WETLANDS, AND HARMING COMMUNITIES IN SOUTH AMERICA (PDF)

If you define the affected population as the Indigenous communities living in and around the principal lithium-bearing salares of the Puna de Atacama, a defensible estimate is tens of thousands of people—at least 40,000–50,000 Indigenous persons, and likely more once Kolla/Colla and other neighboring Indigenous communities are fully included.

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