Chile regulator says lithium miner SQM compliance plan adequate, appeals lower court decision

SANTIAGO (Reuters) - Chile’s environmental regulator on Wednesday defended in court its approval of a plan by top lithium miner SQM to remediate damage to the Atacama salt flat, appealing a lower court decision to scrap the agreement and setting the stage for a new and prolonged legal battle.

FILE PHOTO: A view of Infieles Salt Flat in the Atacama Desert, Chile November 27, 2019. Picture taken November 27, 2019. REUTERS/Fabian Cambero

Chile’s Environmental Superintendent (SMA) blessed SQM’s $25 million compliance plan in 2019 after a multi-year investigation that found SQM had over-drawn lithium-rich brine from the salt flat. But a local environmental court in Antofagasta in December invalidated the plan, calling it “insufficient.”

The regulator called the lower court’s arguments that the plan failed to safeguard the environment “unfounded.” It accused judges of cherry-picking information to favor its finding and “omitting... evidence that had been pondered by the SMA.”

“These errors lead the judges to an incorrect conclusion,” the SMA said in a sharply worded 63-page appeal. “The sentence is totally unjustified in minimizing the technical expertise of the SMA.”

The SMA’s appeal must now be considered by Chile’s Supreme Court.

If successful, it could put an end to years of legal and regulatory wrangling over charges that SQM had over-drawn brine from the environmentally sensitive salt flat. If the appeal fails, the SMA must abide by the lower court ruling and re-open the sanctioning process against SQM, raising new questions about the miner’s Atacama expansion plans.

That process could drag on for some time, as the lower court in December said SQM had no way of proving - and that the SMA had no way of verifying - that the measures it had proposed were capable of “containing and reducing or eliminating the negative effects generated by the breaches of the company.”

SQM did not immediately reply to a request for comment on the latest twist in the long-running legal battle.

But water continues to be a major sticking point for the plans of both SQM and top competitor Albemarle to boost output from the salt flats of the Atacama, the world’s driest desert. The region supplies around one-third of the global supply of lithium, a key ingredient in the batteries that power cell phones and electric vehicles.

Soaring lithium demand has raised questions about whether the region can support current and future levels of lithium production along with the needs of sprawling nearby copper mines, a booming tourism industry and indigenous communities.

Chile possesses the world’s largest reserves of lithium. But the nation’s output has barely budged in recent years, as bureaucratic and environmental hurdles have stymied development.

Reporting by Dave Sherwood; Editing by Chizu Nomiyama