Native peoples demand greater control as Chile ramps up its lithium plans

According to sources from the mining companies and the communities, Chile's indigenous communities in the lithium rich Atacama Desert have been in discussions with two of the country's largest miners in order to gain more control over plans to increase the extraction of battery metal.

Negotiations with Chilean state-run Codelco – the world’s largest copper producer – and Chilean Lithium producer SQM are taking place as the two companies near a final partnership, which will see the state enter the production of lithium, a metal essential for electric vehicle battery technology.

Exclusively learned, the talks began in March to create a "governance plan" and should be completed by year's end. The talks follow a dialogue that began last year, in which representatives of the community and the companies discussed the joint venture.

Both sides claim their aim is to create a new model that gives Indigenous Atacama group, also known by the name Lickanantay groups, an active part in the new venture on a flat of salt that stretches across one of the driest parts of the world, where people have been living for thousands of year.

In a joint press release, Codelco said that it had invited SQM to collaborate on a governance framework that would take into account the views and perspectives of the Lickanantay community in its decision-making process.

The companies said that the system would be "unprecedented in Chile" and conform to international treaties regarding Indigenous rights.

Community leaders visited five indigenous towns located in the Andean foothills and above the salt flats. They emphasized that SQM, Codelco, and other companies must be held accountable for their environmental commitments, especially to limit the use of water.

The idea is that the community, not the company, should decide what happens in their territory, said Sergio Cubillos. Peine overlooks the vast Atacama Basin, which provides a quarter the world's supply of lithium.

If it leads to higher environmental standards, this could lead to a reduction in profits.

A global agreement could also appeal to buyers who are more concerned with ethical mining in order to satisfy shareholder demands and help to avoid protests.

The mining industry views the protests that took place in Panama in the year 2023, which led to the closure of the First Quantum Minerals Copper Mine by the government, as a cautionary story.

"The companies realized that interrupting the production has a detrimental effect," said Yermin Bassques, leader of Toconao's community.

Basques suggested that a regular dialogue would be one option for a framework.

He said: "This would allow us to participate in the discussions on how the extraction process works, how water will be protected, and how extraction will be developed with less impact on the environment."

He noted that obtaining a seat on a board is not the ultimate goal as communities don't want to have a say in business decisions.

Basques said that the dialogue with Codelco was sometimes tense. However, the two parties are now working together in part because they have recognized the importance of community support, after SQM Logistics' protests last year.

We have a thorough knowledge of the water and land in our area. We have the ability to close the flats if necessary.

CLOCK TICKING

Codelco told SQM that the talks will continue in this year. This follows dozens of meetings with Atacama group last year.

The joint venture in which Codelco has a 50% share plus one additional share in control of SQM Atacama operations is expected to take effect in the second quarter of this year, subject to regulatory approvals.

A representative of the Atacama Indigenous Council, which includes 18 communities, said that they were reviewing early proposals for the governance system, including those put forward by Codelco & SQM. However, he declined to give any details.

They refused to submit their proposal, citing that the process was still in progress.

The advisor stated that representatives of the council will meet with Codelco or SQM each week for two to three months in order to finalize a proposal.

The advisor explained that each community will discuss the plan within itself before representatives come to an agreement on the final version with Codelco or SQM. This is expected in the second part of the year.

Codelco plans to increase lithium production by up to 33% until 2060. This goal is part a tectonic shift in Chile's Lithium sector, after leftist president Gabriel Boric announced in 2023 plans to switch to a Codelco-led state-led model that prioritizes Indigenous rights.

Community leaders are concerned about the possibility that Boric's pro Indigenous stance could be shattered by a successor who would not share his pro-Indigenous views.

Some legislators, representing a variety of political parties, have criticised the Codelco/SQM agreement, questioning whether it was in Chile's interest. The majority of presidential candidates from opposition parties are yet to state their position on lithium mining. Boric is prohibited from running for a second term by law.

Basques, Toconao's leader, said: "We need to hurry because we do not know what will happen next year."

In a press release from her office, veteran conservative politician Evelyn Matthei said that she supported mining development and wanted to boost Chile's production of lithium. She also stated that she aimed to benefit everyone, including Indigenous communities.

The Chilean Mining Ministry has declined to comment about the Codelco/SQM joint venture.

NEW MODEL

U.S. Geological Survey figures show that Chile is the world's second largest producer of lithium after Australia.

Experts say that while some Indigenous groups have played a larger role in environmental management in Canada and Australia, these practices are rare throughout Latin America.

Seth Goldstein of Morningstar Research Services, a Morningstar analyst, believes that SQM's shareholders and customers who are concerned about environmental, social, and governance risks (ESG), such as European automakers will likely view a native agreement as favourable for SQM.

He said that "Dialogue makes it easier for SQM to continue its operations."

SQM has already established Indigenous outreach programs including working groups and complaint channels. The company has provided solar panels and dental care in some communities. It also offers agricultural training.

SQM's community relations efforts are in line with best practices, according to a 2023 Audit by the Initiative for Responsible Mining Assurance. (IRMA), a process of evaluation that is preferred by EV manufacturers for supply chain transparency.

Despite the audit, SQM has a long way to go before it can overcome decades of mistrust.

Winder Flores is aware of the dangers. He grew up near the Atacama Salt Flat in Talabre, and now he helps his mother, who's aging, make cheese and knitted crafts in Tambillo.

He said that he wanted the miners to ensure that the water supply would not be affected by pollution.

We're not against development in the country, but we want to be a part of it and not left with nothing. (Reporting and editing by Adam Jourdan; Veronica Brown, Claudia Parsons, and Daina Beth Solon)

(source: Reuters)