August 5, 2010 / 4:38 PM / 9 years ago

Lithium heavyweights urge Chile to lift blocks

* Producers say Chile regulation hurts growth

* Govt wants industry to grow, strong opposition seen

* Mining powerhouse Chile is top producer of lithium

SANTIAGO, Aug 5 (Reuters) - Top lithium producers on Thursday urged Chile to overhaul regulation to allow them to increase output of a metal seen booming in coming years with the advent of electric cars.

Chile, holder of some of the world’s biggest reserves of the metal, which is used in batteries, has set output limits for lithium producers SQM and Rockwood Holdings. Legislation from the 1970s has restricted lithium concessions and declared the metal a strategic resource because of its possible military uses.

Santiago-based SQM’s (SQM_pb.SN) vice president, Patricio de Solminihac, said regulation thwarts key growth opportunities as demand for electric cars grows.

“If we don’t continue to move forward, we will lose our leadership and a great opportunity,” Solminihac told businessmen in Santiago. “Because of these restrictions we have not been able to convince the (car) industry that we are a reliable source in the long run.”

SQM has the capacity to produce around 40,000 tonnes of lithium carbonate per year.

Lithium is a key component in rechargeable batteries that power laptop computers, digital cameras and cell phones.

Mining Minister Laurence Golborne said he would like the lithium industry to grow in coming years, signaling reforms to current legislation that could open the industry to other players, including top copper producer Codelco [CODEL.UL].

Leftist lawmakers have said the state should keep its tight grip over an industry that could bring billions of dollars in revenue in the future.

The head of Rockwood Holdings’ ROC.N German unit, Chemetall GmbH, Monika Engel-Bader, said Chile should do more for companies to secure new concessions and speed up permits.

“For further growth we need long-term stability on mining rights,” she said

Reporting by Alonso Soto; Editing by Walter Bagley

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