Chile's SQM wins local lithium concession

SANTIAGO, Sept 24 (Reuters) - World No. 1 lithium producer SQM has won a tender to develop a lithium concession in Chile, which produces around 40 percent of the metal, used widely in hybrid vehicles and computer and smartphone batteries, the Mining Ministry said on Monday.

Chile's SQM offered to pay around $40.6 million for a 20-year concession. It beat out rivals Posco Consortium, made up of Posco Ltd, Mitsui & Co, Daewoo International Corp and miner Li Energy Spa, and Chilean miner NX UNO de Peine.

Development of lithium has been tempered by a constitutional ban on concessions in world No.1 copper producer Chile. Special contracts for lithium production, however, are legally permitted.

Demand for lithium batteries has risen in recent years because they are more efficient and help cut carbon emissions. The rising popularity of smartphones, which need longer-running batteries, has also helped.

The concession could boost global lithium supply by around 15 percent, Deputy Mining Minister Pablo Wagner has said.

The chief operating officer of SQM, which also produces fertilizer and iodine, is the brother of Mining Minister Hernan de Solminihac. The Minister is not participating in the development of the lithium contracts to avoid a conflict of interest.

SQM held around 31 percent of global lithium market share in 2011, according to the company.

Some in Chile have decried the tender, accusing the government of surrendering a valuable resource to private hands.