The agreement will triple SQM`s lithium production quota of 180,000 tonnes of metallic lithium equivalent and allow it to produce an additional 349,553 tonnes by the end of its contract in 2030. The Corfo-SQM 2019 agreement contains certain commitments, including a contribution of $13,171,294, or 1.7% of our revenue over the reporting period. The SQM will have to contribute 1.7% of its annual turnover by 2030, when the SAlar d`Atacama CORFO agreement will end. This contribution, amounting to $13,171,294, is divided into: these agreements define the contributions to be paid as a percentage of the turnover of the SQM, in particular 0.2% in San Pedro de Atacama and 0.1% in Antofagasta and Maria Elena. This year, this figure represents $1,545,494 for San Pedro de Atacama and $772,747 for the other two municipalities. In addition, the SQM is to provide $14 million to promote sustainable development and investment projects in the communities of Salar de Atacama, duly registered with CONADI. A contribution of $10.8 million is also being requested for the Antofagasta Centre for Clean Technology (R-D). Promised contributions are currently being deferred until the formalities of the agreement are completed. The dispute had threatened to complicate Nutrien Ltd`s offer to sell its stake in SQM. The fertilizer group, created earlier this year by the merger of Saskatchewan`s Canadian Potash Corp. and Agrium, is to sell its stake in Chilean lithium miner as part of an agreement with Indian supervisory authorities.
The total value of the SQM`s investments in municipalities is $4.9 million, which does not include contributions under the CORFO agreement. In addition, in 2019, a total of $1.7 million was spent on administrative expenses for community work. The municipalities of Antofagasta, San Pedro de Atacama and Maria Elena have signed contracts setting out the terms of the funds handed over each year by the SQM until the expiry of the contract with Corfo at Salar de Atacama in 2030. Roskill View: The renewal of the SQM license and the approval of the extension were somewhat inevitable, given what Chile could potentially lose, but it was clearly catalyzed by the recent change of government. The extension of quotas allows the SQM: to triple production at Salar de Atacama to 216,000tpy LCE against 60,000tpy LCE, which, with the expected capacity increases in the Albemarle operation in the Atacama and Corfo plans to develop the Maricunga and Pedernales Salars, could make Chile the largest producer of lithium. It is possible that the Corfo-SQM agreement could open up Chile`s lithium sector after years of obstruction, and Corfo is already pushing Chile to dominate the market in the future. Roskill expects SQM to increase its capacity in Chile, with its investments in Argentina in Cauchari and in Australia, Mt Holland, with the aim of maintaining a 25% market share. This would mean that the maximum capacity would be reached by the mid-2020s. After a limited supply of lithium connections, there is no doubt that SQM customers will breathe more easily, with strong demand growth in the years to come. The agreement is less optimistic for SQM`s current and potential competitors, who will now see a more competitive market. The long-running dispute between Corfo and sqM ended last week, when the two sides drafted an agreement allowing the SQM to produce an additional 349,553 li (1.86Mt LCE) from their Salar plant in Atacama lithium by 2030 and expand its capacity to 216,000 tpy.
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