Corfo is Chile’s state agency in charge of handling lithium contracts.
Albemarle operates a lithium production facility in the lithium-rich Atacama salt flats in the Atacama Desert in northern Chile.
The other major lithium producer active in the Atacama salt flats is Chile’s Sociedad Quimica y Minera (SQM).
Lithium is a key ingredient in batteries that power electric vehicles (EVs), sales of which are expected to soar in Europe and other regions with the shift to greener mobility gathering momentum.
Corfo has demanded that Albemarle pay $15 million in extra royalties for 2020.
The lithium miner already paid $44 million in royalties for 2020. Corfo has argued that as of 2020, Albemarle stopped complying with the contract signed in 2016 with the state of Chile, which established quarterly payments on its sales of lithium and other minerals extracted in Chile.
“The company decided to arbitrarily and unilaterally change the method of calculating royalties,” Corfo said.
“Lithium is a strategic resource for the future of the country, and it is totally unacceptable that Albemarle does not fulfill the contract when the agreement is less favorable, due to the fall in the price of lithium worldwide,” Corfo’s executive vice-president Pablo Terrazas said in a statement.
“We reaffirm that we have fulfilled all our contractual obligations with the State of Chile, including the payment of the corresponding commissions. We regret that Corfo has insisted on this arbitration process, which will involve time and costs for the country, even though there is a clause in the same contract for the solution of these issues,” an Albemarle spokesperson told Fastmarkets.
“We reaffirm our commitment to Chile and will continue to produce sustainable lithium for the world while we await the outcome of this litigation,” the Albemarle spokesperson said.
Prices for lithium surged over 2016 and 2017. But additional capacity expansions outstripped demand growth between 2018 and 2019, triggering a slump in prices.
The Covid-19 pandemic added further bearish pressure to lithium prices over most of 2020.
Yet in the key consuming market of China, the price of lithium carbonate started to increase in the last quarter of 2020, dragging up prices across the whole lithium complex thus far in 2021.
Battery-grade and technical-grade lithium carbonate prices in China bottomed out at the beginning of the fourth quarter of 2020 amid a resurgence of lithium iron phosphate (LFP) battery demand in the country.
Fastmarkets’ weekly price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China
was 68,000-73,000 yuan per tonne ($10,481-11,251) on Thursday February 18, up by 46.9% from 45,000-51,000 yuan per tonne on February 20, 2020.