Chile captures 70% of its lithium rent and risks losing its global position

Lithium extracted from the Salar de Atacama represented $2.7 billion in Chilean exports in 2024. Without new productive capacity, Chile’s share of global production could fall from 23 to 17% by 2030, according to projections from Cochilco, the public mining agency. The country that holds the world’s largest known lithium reserves is preparing its own competitive decline.

This is the central paradox of Chilean lithium policy: the State has built a solid institutional framework to capture the rent, but the very solidity of that framework is slowing the investments necessary for the rent to continue growing. The test is full-scale, and its results will illuminate far beyond Chile.

The essentials

  • In 2025, the Chilean State captures approximately 70% of NovaAndino’s operating margins, the public-private joint venture that operates the Salar de Atacama; this rate rises to 85% from 2031 onwards.
  • Without new capacity, Chile’s share of global lithium production should decline from 23 to 17% by 2030 (Cochilco).
  • The NovaAndino contract runs until 2060, validated by twenty regulators and the Comptroller General of the Republic. Liberal José Antonio Kast, who took office on March 11, 2026, does not have a majority in Congress to modify it.
  • The issue is not ideological. It is a problem of real optimization: can a State simultaneously capture 70 to 85% of the rent and attract the billions of investments necessary to maintain its global position?

Global lithium production tripled between 2018 and 2024. Australia, betting on its spodumene mines, consolidated its first-place position. Argentina multiplied private concessions. Southern Africa began developing its own deposits. Meanwhile, Chile debated.

The debate was not without reason.

The NovaAndino model: an architecture designed to last

The NovaAndino joint venture, created under Gabriel Boric’s government, associates Codelco and SQM, Chile’s private minerals giant. The State holds 51% of shares. The contract, which runs until 2060, defines a progressive revenue-sharing structure: approximately 70% of operating margins to the State in the early years, then 85% from 2031 onwards. These figures are not the result of ordinary political bargaining. Twenty regulators validated them. The Comptroller General of the Republic validated the legal status of the contracts in December 2025; the Chilean Supreme Court, for its part, rejected in January 2026 a suspension request filed by Tianqi, a minority shareholder in SQM who contested the deal, but a substantive appeal filed by Tianqi remained pending before the Supreme Court.

The stated objective was twofold: for Chile to stop selling raw material and retain more value on its territory, and for the rent to finance the country’s social transition. On the first point, results remain limited. On the second, the timing is ironic: Kast, who won the presidential election in November 2025 on a liberal platform, inherits this very framework precisely on March 11, 2026.

What he inherits is locked in. Without a majority in Congress, Kast cannot modify the terms of the NovaAndino contract. The structure Boric built will survive, at least in the short term, the political alternation that was supposed to condemn it. Paradoxically, this is the best proof of its institutional robustness.

Why 17% in 2030 is a real threat

Cochilco’s projections are not catastrophist. They are mechanical. If no new extraction capacity is put into service, if announced expansions remain blocked, if investors hesitate, Chile produces the same absolute quantity of lithium while the rest of the world accelerates. Its relative share collapses.

Australia is exploiting its deposits at a sustained pace. Argentina has engaged discussions with American, Canadian, and Korean private actors. Morocco is exploring its own resources. Global lithium demand, meanwhile, should be multiplied by 6 by 2030 — and by 40 by 2040 — according to the International Energy Agency, driven by electric vehicle batteries and stationary storage. Whoever misses this window won’t find it again soon.

The Salar de Atacama concentrates high-purity lithium, extractable at among the world’s lowest costs. It is a structural competitive advantage that neither Australia nor Argentina can easily replicate. Squandering it through institutional blockages would not be a political mistake. It would be a pure economic mistake.

The tension is readable in the numbers. SQM, the private partner in NovaAndino, had scheduled significant expansions of the Salar before the joint venture’s creation. These projects slowed during negotiations. Some remain in abeyance. The investments required to maintain Chile’s position are estimated at several billion dollars over the decade. With a captation rate of 70 to 85% of operating margins, the expected return for the private investor compresses to a level that does not incentivize urgency.

What the Milei model doesn’t explain

The comparative debate between Chile and Argentina has often been presented as an opposition of economic models. On one side, Javier Milei’s radical liberalization, which opened mining concessions on terms attractive to private investors. On the other, the Boric model, now inherited by Kast, with a majority State and a heavily mutualized rent.

Milei’s Argentina deserves precise reading before being used as a counterexample or as a model. Argentine economic reforms have produced real but fragile macroeconomic effects, and the institutional framework there remains uncertain. Investors in Argentine lithium are taking a real bet on the regulatory stability of a country whose history invites caution.

The real question, therefore, is not: which model is right? It is: at what level of rent captation can a State stabilize a sufficient investment flow to maintain its relative production in a race that is accelerating globally?

This question has no doctrinal answer. It has empirical answers, and they vary according to sectors, geographies, and political contexts. Norway captures the oil rent massively through Equinor while maintaining a dynamic sector and significant investments. But Norway operates in an institutional and geopolitical environment very different from that of the Atacama. What works in the North Sea is not mechanically transposable to an Andean salt flat.

What Kast can do without changing the contract

The NovaAndino architecture is locked in until 2060. But the Kast government has real levers outside the contract itself.

The first is regulatory. Permitting timelines for environmental and mining approvals in Chile are among the longest in South America. Accelerating these procedures without weakening them could unlock investments that have been waiting for two to three years. It’s not spectacular, but it’s concrete.

The second is fiscal around the contract. The structure of 70 to 85% concerns operating margins, not gross revenue. Mechanisms of accelerated depreciation, investment deductions, or exemptions on new expansions could improve the effective return for the investor without modifying the facial captation rate.

The third is strategic: downstream transformation. If Chile cannot extract more lithium in the short term, it can start producing precursors, cathodes, battery cells on its territory. The rising rent of $9 billion projected for 2035 assumes prices remain high and demand continues to grow. But the real value-added is created downstream. Several Asian countries understood this well before the Chilean debate reached this stage.

On this terrain, Kast’s agenda and Boric’s are not as opposed as a superficial reading suggests. Both recognize that Chile cannot remain forever an exporter of concentrated brine.

The window from 2026 to 2031

By 2031, the State’s captation rate rises from 70 to 85%. This is a window. During these five years, the return for the private investor is less compressed than it will be afterwards. It is also the period during which expansion projects could be undertaken, permits obtained, capacities put under construction.

Kast has an interest in using this window. SQM has an interest in using it. Lithium buyers, primarily automakers and Asian and European battery manufacturers, have an interest in Chile remaining a competitive supplier. A convergence of interests exists. It is not automatically converted into decision.

What is missing is not abstract political will. What is missing is a coordination mechanism between parties: State, operator, downstream investors, environmental regulators. South Korea, whose battery value chains depend partly on Chilean lithium, has already engaged bilateral discussions with Santiago. The European Union, through its Critical Raw Materials Regulation, is seeking to secure diversified supplies. These dynamics create useful external pressure, because they give the Chilean government partners with whom to negotiate more robust investment guarantees.

What this test will tell the rest of the world

Chilean lithium management is of interest not only to natural resources economists. It interests all countries that hold resources critical for the energy transition and that seek to capture more value from them.

The Democratic Republic of Congo with cobalt. Morocco with phosphate. Indonesia with nickel. All have attempted, to varying degrees, to establish higher captation regimes. Some have succeeded in maintaining investment flows. Others have seen mining majors relocate.

The difference between success and failure does not lie in the level of the captation rate per se. It lies in the combination of three factors: the quality of the resource, which determines the residual rent available for the investor; institutional stability, which determines the risk premium the investor demands; and the State’s capacity to invest its share of the rent in infrastructure that reduces operating costs.

Chile has the world’s best resource. It has institutional stability that few emerging countries can match. What the test of the coming years reveals is whether the quality of its governance allows it to transform these two assets into productive investment, or whether maximum short-term captation will impair its long-term positioning.

The answer will be readable by 2028, when the first investment decisions made under Kast, or deferred, will produce their effects on extraction volumes. At that point, the NovaAndino model can be judged on its results, not on its intentions.

Sources

  1. Mining Technology — Salar de Atacama expansion and Chile lithium output 2026: https://www.mining-technology.com/analyst-comment/salar-de-atacama-expansion-chile-lithium-output-2026/
  2. Cochilco (Chilean Copper Commission) — Lithium production projections, 2024 annual report
  3. International Energy Agency — Global EV Outlook 2024: https://www.iea.org/reports/global-ev-outlook-2024
  4. European Critical Raw Materials Regulation, Official Journal of the European Union, 2024
  5. Chile lithium report 2024 — French Treasury DG: https://www.tresor.economie.gouv.fr/Pays/CL/le-lithium-au-chili
  6. Codelco — Official NovaAndino statement (12/29/2025): https://www.codelco.com/en/prensa/2025/chile-da-un-paso-historico-se-materializa-novaandino-litio-la-sociedad
  7. Chilean government website — NovaAndino Litio: https://www.gob.cl/noticias/nova-andino-litio-codelco-sqm-produccion-litio-salar-de-atacama/
  8. Natural Resources Canada — Lithium Facts (USGS): https://natural-resources.canada.ca/minerals-mining/mining-data-statistics-analysis/minerals-metals-facts/lithium-facts
  9. Rio Times — Chile Lithium 2026 Guide: https://www.riotimesonline.com/chile-lithium-2026-guide/
  10. Argus Media — SQM Codelco NovaAndino: https://www.argusmedia.com/en/news-and-insights/latest-market-news/2770632-sqm-codelco-create-public-private-li-miner
  11. SEC filing SQM — NovaAndino completion: https://www.sec.gov/Archives/edgar/data/0000909037/000090903726000006/s-ksqmannouncescompletiono.htm
  12. Connaissance des Énergies — IEA lithium demand: https://www.connaissancedesenergies.org/questions-et-reponses-energies/lithium-ou-en-est-la-france-dans-la-course-mondiale-lapprovisionnement