Chinese companies are closely watching Chile’s plan to nationalise its lithium industry, which may negatively impact prices and import volumes to the world’s largest producer and consumer of new-energy vehicles (NEVs).

Last week, Chile’s President Gabriel Boric announced the nationalisation plan to boost its economy and protect its environment.

China’s Tianqi Lithium Corporation is monitoring the situation, state-run Global Times newspaper reported, citing news portal

The company has a 22.16 percent stake in Chilean miner SQM. The company, along with US-based Albemarle Corp, mines lithium in Chile, with concessions to expire in 2030 and 2043.

Tianqi said it only acquires investment income from SQM’s operation, as its relationship is “based on the stake it holds,” the news portal noted. 

China-based Ganfeng Lithium said its lithium mineral imports from Chile are “quite small” as it mainly imports from Australia, news website reported.

BYD, the world’s largest electric vehicle maker, has got approval to build a factory and produce lithium iron phosphate (LFP) cathodes material in Chile, Global Times said.

With an investment of $290 million, the factory will produce 50,000 tonnes per year of LFP cathodes and is scheduled to start production in 2025.

Mo Ke, chief analyst at Zhenli Research, told Global Times that the plan could face pushback from interest groups that back Chilean lithium firms. 

“But it is highly likely that the plan will proceed and affect global lithium supplies,” Mo said. Last year, China’s lithium carbonate imports from Chile accounted for 89.5 percent of total imports.   

Chile’s plan could weigh in on China’s supply of the strategic resource, industry insiders said, calling for faster progress on domestic technology breakthroughs for extracting lithium from salt lakes.

(Writing by P Deol; Editing by Anoop Menon)