Chilean lithium giant SQM and state-owned copper company Codelco have extended the concession to mine lithium in the Salar de Atacama region, Kallanish reports.

The long-awaited agreement announced on Friday establishes the economic conditions of the deal over two periods: 2025-2030 and 2031-2060. Codelco’s subsidiary Minera Tarar will merge with SQM’s subsidiary SQM Salar to form a joint venture in which Codelco will own 50% of the shares plus one.

SQM will remain the JV operator and will be entitled to higher production and sales quotas until 2030. Codelco, acting on behalf of the Chilean state, will take operatorship from 2031 to 2060.

As part of the agreement, SQM says it will also sell assets and intellectual property in the Salar de Maricunga to Codelco for their book value of approximately $18,000.

During the first period of the JV operation, Codelco will receive the proportion of profit generated by 33,500 tonnes of lithium carbonate equivalent (LCE) and SQM the profit generated by 165,000 metric tonnes of LCE.

From 2031, dividends will be distributed based on the number of shares. Codelco says the state will receive 85% of the operating margin of the new production through payments to Corfo, taxes and the profits that Codelco receives as a shareholder.

For the deal to go ahead, Corfo, Chile’s economic development agency, will have to increase the JV’s authorised production quota between 2025 and 2030, as well as establish the right to mine lithium in Atacama between 2031 and 2060.

Other conditions include completing a consultation process with Indigenous communities and obtaining government and shareholder approvals. SQM’s second-largest shareholder, China’s lithium giant Tianqi, is yet to comment on the deal.

Codelco’s president Máximo Pacheco says the company takes the new responsibility and entry into the lithium market with “deep pride.”

“Just as we have contributed to making Chile a world leader in copper production, we will now contribute to making our country a leader in the production of lithium, another critical mineral for the energy transition that allows us to combat the climate emergency,” he says. “We will do so as partners of SQM, a Chilean company that has the scale, technical and human experience, financial resources and marketing network that we need to not miss the opportunities that are offered to us today.”

The soon-to-be partners expect to close the deal in the first half of 2025. The deal was first tabled in December through a MOU, with an initial 31 March deadline extended to 31 May.

Shares in SQM rose 2.2% at the time of publication.