Chile's Codelco secures new lithium quota for SQM partnership

By Fabian Cambero, Daina Beth Solomon

SANTIAGO, July 1 (Reuters) - Chile's state-run copper producer Codelco said on Tuesday it has secured regulatory approval for a new lithium quota, clearing one of the remaining hurdles to produce the battery metal through its joint venture with miner SQM.

Chile's nuclear energy regulator CCHEN has approved extraction of 2.5 million metric tons of lithium metal equivalent (LME) from 2031 to 2060, Codelco said.

The approved amount could rise to 3.02 million metric tons for the same three-decade period if the joint venture secures environmental permits for expanded production.

If CCHEN grants the higher quota, it would allow for the production and sale of up to 330,000 tons of lithium carbonate equivalent (LCE) a year for the three-decade time span, Codelco said.

The nuclear agency has authorized lithium quotas and exports since 1979, when the military government of ex-dictator Augusto Pinochet declared lithium "strategic" because of its nuclear applications. The metal is now a key element of electric vehicle batteries.

The Codelco-SQM deal, which will bring the state into lithium production in Chile for the first time, still requires two key elements before it can be finalized - regulatory approval from China, and the completion of a consultation with local indigenous groups. The deal required approvals from a number of countries because of SQM's presence in international markets.

A senior Codelco source told Reuters this week that it expects both conditions to be met by September.

At present, Santiago-based SQM and U.S. firm Albemarle are the only lithium miners in Chile, which is the world's second-largest producer of the metal. SQM's current approved quota for lithium production is due to expire at the end of 2030.