Mining shares in London fall sharply21 Apr 2023 16:33
SANTIAGO (Reuters) - Shares in Chile's top two lithium miners, SQM and Albemarle Corp, slid on Friday after the Andean country, which has the world's largest reserves of the battery metal, unveiled a plan to nationalize the industry.
The move would see Chile, the world's second largest lithium producer, shift to a model with the state holding a controlling interest in all new lithium projects through a public company that would partner with private mining firms.
The bid for state control in Chile reflects a wider wave of lithium nationalism around Latin America, home to the so-called "lithium triangle", which holds the world's largest trove of the metal essential for electric vehicle batteries.
It poses a fresh challenge to electric vehicle (EV) manufacturers scrambling to secure battery materials. Mexico nationalized its lithium deposits last year, and Indonesia banned exports of nickel ore, a key battery material, in 2020.
Chile's young progressive President Gabriel Boric said late on Thursday in his announcement that the country would not cancel existing contracts, though it would try to negotiate with mining firms to voluntarily shift to a public-private model.
In early trading on Friday, Chilean firm SQM's U.S.-listed shares slid 6.2%, while Albemarle was down 2.5%. SQM's lithium contract in Chile is set to expire in 2030 and Albemarle's in 2043, giving it more insulation from the potential move.
Mining shares in London fell sharply too. Rio Tinto dropped by as much as 5% at one point to its lowest in almost a month, and was last down 4.7%. Shares in rival Anglo American fell 4% on the day, making the basic resources sector the worst performer in Europe.
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