July 27, 2020 / 10:28 AM / 14 days ago

Chile judge calls for water study on 'fragile' lithium-rich Atacama salt flat

SANTIAGO (Reuters) - A top environmental judge in Chile renewed a call for a government-vetted water study to help stamp out lingering questions about sustainability that have cast a pall over Chile’s lithium-rich Salar de Atacama.

FILE PHOTO: An aerial view shows the brine pools of SQM lithium mine on the Atacama salt flat in the Atacama desert of northern Chile, January 10, 2013. REUTERS/Ivan Alvarado

Water - both fresh and saline, where the lithium lies - has long been a sticking point for miners at Atacama, one of the world’s richest reserves of the ultralight battery metal. The flat sits amid the world’s driest desert.

Mauricio Oviedo, president of the Environmental Tribunal of Antofagasta, a region home to all of the country’s lithium production and much of its copper output, called the salt flat “highly fragile.”

“If Chile wants to continue managing the Salar, it should have a model that would give us (all) greater certainty,” Oviedo said in an interview with Reuters.

“To the court, it seems like commonsense if we want to do sustainable mining in the Salar that we effectively need to have all the elements on the table.”

Oviedo first called for a study in December when the Antofagasta court he oversees tossed out a $25 million remediation plan honed over three years by Chilean lithium producer SQM, saying it had relied on questionable science.

The court cannot require a water study. But Chile development agency Corfo, which oversees lithium holdings at Atacama, has hired a third-party to conduct a hydrological survey of the Salar. That study has been repeatedly delayed since 2018.

Oviedo’s decision reignited concerns over SQM’s ability to ramp up output to meet fast-growing demand from the electric vehicle industry. Atacama, home to SQM and top competitor Albemarle Corp (ALB.N), already supplies around one-quarter of the world’s lithium.

Regulators required SQM (SQMA.SN) to develop the disputed compliance plan after charging the miner with over-pumping lithium-rich brine from beneath the flat. The company has appealed the decision to scrap the program to the Supreme Court. A decision is pending.

But while the courts ponder SQM’s fate, uncertainty continues to linger in the Salar.

“The state of the salt flat today is as described in our decision: Very fragile, and with much scientific uncertainty,” Oviedo said.

Newcomers should not be deterred from proposing projects on the flat, Oviedo added, but said the decision should be considered a “precedent” by regulators.

The void led Albemarle, the world’s No.1 producer of lithium, to propose in December its own network to study water on the salt flat.

German automakers Volkswagen (VOWG_p.DE) and Daimler (DAIGn.DE) this year joined the push for more sustainable lithium mining in Chile, a sign of growing supply chain concerns ahead of an expected electric vehicle boom.

Reporting by Dave Sherwood, editing by Adam Jourdan

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