The Chilean national economic development agency, Corfo,
which owns the lithium-rich Salar de Atacama, has opened a
dispute with United States-based lithium producer Albemarle to
seek an interpretation by the International Chamber of Commerce
(ICC) of a contract between the two.
The contract between Corfo and Albemarle was signed in April 2017. It says that
Albemarle would have to sell as much as 25% of its lithium
production from Atacama at a preferential price to another
company or companies willing to invest in the production of
value-added lithium materials in Chile.
Corfo made a call for such investors in May 2017. This
resulted in a shortlist published on March 9 this
year from which Corfo selected Molymet, Samsung SDI
and Sichuan Fulin Industrial Group. They will be permitted to
buy as much as 25% of Albemarle’s lithium output,
which totals 20,000 tonnes per year at the moment, at
Corfo has a similar agreement with Chile-based lithium
producer SQM, which shares the Salar de Atacama with
The three investor companies are expected to put $754
million into Chile and to create more than 650 new jobs once
their projects start. No time-frame was specified for this,
however, and Fastmarkets understands that none of this
investment has yet been made.
But the Corfo-Albemarle dispute could put these investments
The disagreement between Corfo and Albemarle concerns the
level of the preferential prices, and began as a formal legal
process on October 17, after months of conversations.
"After several months of talks, we have not reached an
understanding [with Albemarle] regarding a definition of the
preferential price for 25% of its lithium production, which has
the objective of kick-starting the value-added industry in
Chile," Corfo said in press release on Wednesday October
"We firmly believe that Albemarle’s proposal is
not adjusted to the contract terms, [and does] not respond to
the promotion of a value-added industry in [Chile]," the agency
added. "As [required] by the government from the first day,
Corfo assiduously monitors whether the contracts associated
with lithium are fulfilled, and will not allow any breach that
harms the interests of all Chileans."
Fastmarkets made several attempts to contact Corfo
representatives for further comment, but had not been
successful at the time of publication.
Sources within the lithium industry told Fastmarkets that
the dispute started because Albemarle’s
interpretation of "preferential prices" would exclude any sales
to its own subsidiaries, because of the lower prices at which
Albemarle sells to them. The inclusion of such sales in the
definition would mean that the preferential price would be much
Although Albemarle did not comment on its interpretation of
"preferential prices," Eric Norris, president of
Albemarle’s Lithium Global Business Unit, told
Fastmarkets that "per our contract with Corfo, Albemarle pays
commissions of up to 40% on the final sales prices paid by its
customers, not the value used for related company
Norris went on to say that "we regret that we have to [go
through] this arbitration due to the substantial differences
between the obligation defined in our contract with Corfo and
the summoning and awarding of production at a preferential
price made by this agency. We have confidence in our
According to the former vice president of Corfo, Eduardo
Bitran, who promoted the original contract, the agreement
specified that Albemarle would have to sell 25% of its
production in Chile at a preferential export price, and this
included the prices at which Albemarle sells material to its
subsidiaries in the US and Germany – which are the
lowest prices achieved by the company.
Bitran negotiated the agreement with Albemarle before
stepping down on March 9 this year after a change in the
"Corfo did an exhaustive study of the prices of lithium sold
from Chile by Albemarle and SQM, by working with Chilean
customs, and it was concluded that Albemarle is selling lithium
compounds at 25-35% discounted prices to the US and Germany,
compared with other Albemarle sales and its competitor SQM,"
Bitran told Fastmarkets.
Bitran said that some of the sales between Albemarle Chile
and its subsidiaries in the US and Germany would have a price
as low as $7,000 per tonne and that, under the terms of the
contract, Molymet, Samsung SDI and Sichuan Fulin would have to
benefit from a similar preferential price if that is
Albemarle’s lowest export price from Chile.
Fastmarkets assessed the contract price of lithium carbonate, min 99%,
technical and industrial, ddp Europe and US, at
$14.50-17.50 per kg on September 26. This was down month on
month from $16-18 per kg.
Fastmarkets assesses the market price and updates it month
by month, but company transfer prices are lower than the market
level and are excluded from our assessments.
Lower company transfer prices are typical of the lithium
market and other metal and mineral markets where corporations
have assets in different territories.
Albemarle production expansion in Chile
In related negotiations, Corfo will allow Albemarle to
increase its lithium quota in Chile to as much as 140,000 tonnes per year of lithium carbonate
equivalent (LCE) by 2043 from 80,000 tpy in January 2017.
At the same time, Corfo established in January 2017 a progressive commission system payable to the
Chilean state that would go as high as 40% for
material sold at a price of more than $10,000 per tonne. This
was a condition for the expansion of Albemarle’s
This increase in production is expected to happen without
extracting more brine from the Salar de Atacama, but instead by
introducing new technology to improve lithium extraction from
the same volume of brine.