January 24, 2019 / 10:18 PM / 9 months ago

UPDATE 2-Chile strikes deal with lithium miner Albemarle in contract dispute

(Adds details on Albemarle production, value-added industry)

By Dave Sherwood

SANTIAGO, Jan 24 (Reuters) - Chile state development agency Corfo said on Thursday it had reached a deal with the world’s top lithium miner, Albemarle Corp, to resolve a contract dispute and would not file a previously threatened arbitration lawsuit against the U.S-based producer.

The spat centered around an amendment to the contract that requires Albemarle to provide as much as 25 percent of its annual production of lithium at a discount to companies seeking to produce battery metals within Chile.

Corfo and Albemarle had disagreed on how much to discount the lithium, prompting the threat of arbitration.

Albemarle’s president of lithium, Eric Norris, said that Thursday´s deal with Corfo was “in line with what we expected our commitment on preferential pricing and terms to be.”

“The agreed upon process will have no material impact on our anticipated earnings growth, margins or other financial results,” Norris said in a statement.

Albemarle operates in Chile’s Salar de Atacama, a salt flat in the country´s northern desert that supplies nearly 40 percent of the world´s lithium. Corfo, which leases mining rights in the Salar, had previously threatened to cancel its contract with Albemarle over the dispute, raising the spectre of potential supply disruptions amid booming demand.

The contract amendment that requires Albemarle to provide the ultralight battery metal at a reduced price is meant to spur a value-added lithium industry in Chile.

Lithium is an important ingredient in the batteries that power cell phones, electric vehicles and other consumer goods.

In March, Corfo awarded contracts to Chile’s Molymet, China’s Sichuan Fulin Industrial Group and a joint venture between Samsung SDI Co Ltd and South Korea’s POSCO to produce battery components in Chile using the discounted lithium from Atacama, for a total investment of $754 million.

Those projects had been delayed pending resolution of the dispute between Corfo and Albemarle.

Corfo attorney Maria Elina Cruz said the new agreement would allow the three projects, which had been delayed by the contract dispute, to now move forward.

“Coming to agreement will allow us to roll out the value-added industry that was the heart of the contract,” Cruz said in a statement. (Reporting by Dave Sherwood; Editing by Grant McCool and Sandra Maler)

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