Corfo attributed the cancellations to a significant decline in global lithium prices, which affected the companies’ investment decisions. In 2023, Corfo had selected BYD and Tsingshan for a preferential lithium pricing deal to encourage investment. Corfo stated: “The companies selected by Corfo have been affected in their investment decisions by the global market conditions, which have shown a sharp drop in prices.”
Tsingshan informed it has abandoned a $233 million project to produce 120,000 metric tons of lithium iron phosphate (LFP). Chile’s national assets ministry confirmed that BYD submitted its withdrawal notice in January. BYD, a leading global electric vehicle manufacturer, declined to comment. Last year, BYD had indicated delays for its $290 million plant, designed to produce 50,000 metric tons of LFP annually.
The projects were part of an initiative offering preferential lithium prices from Chilean miner SQM until 2030. Corfo noted that the timeframe and market conditions likely influenced the withdrawals. Additionally, Corfo mentioned that Tsingshan proposed assigning the project to a subsidiary not involved in the original bidding, which was not permitted.
Chile has faced challenges in attracting lithium-related investments. A similar 2018 pricing deal collapsed when companies, including Chile’s Molymet, China’s Sichuan Fulin Transportation Group, and a Korean joint venture between Posco and Samsung, withdrew for various reasons. Despite this setback, Corfo launched a new bidding process last week, offering a purchasing agreement with U.S. lithium producer Albemarle through 2043 for companies investing in lithium-related projects. Albemarle and selected investors can negotiate alternative pricing arrangements, according to Corfo.
These developments highlight the complexities of global lithium markets and Chile’s ongoing efforts to strengthen its role in the battery supply chain while navigating economic challenges.
