SANTIAGO, Feb 2 (Reuters) - U.S. lithium producer Albemarle has signed a deal with Chile to significantly increase its output of lithium at a time when interest in the mineral that powers electric car batteries is heating up.
Albemarle Corp unit Rockwood will invest between $400 million and $600 million in the next four years to increase its production of battery-grade lithium carbonate from Chile to 70,000 tonnes from its current 24,000, the economy ministry said in a statement late Monday.
The Chilean government wants to ensure the country will benefit from its natural bonanza and said it will earn up to $100 million annually in taxes and royalties as a result of the Albemarle deal. The company also will support the research in Chile of lithium applications and solar energy.
Salt flats in the remote north of Chile and neighboring Bolivia hold some of the world’s largest reserves of lithium, an important ingredient in rechargeable batteries. Chile currently is the second largest producer globally, after Australia.
“The (planned) increase will enable the company to meet the accelerating demand for lithium,” Albemarle said in a statement.
A scramble to secure lithium resources has been gathering pace as prices for the mineral have steadily risen, bucking the global commodities trend. Annual demand is forecast to more than double by 2020 from 95,000 tonnes now.
In recent weeks, state copper firm Codelco has announced tender plans for two reserves and U.S. electric vehicle maker Tesla was rumored to be in Chile meeting with the government.
On Monday, Canada’s Wealth Minerals said it was in talks to buy Li3, a firm that owns lithium assets in Chile.
Chemicals firm Albemarle spent $6.2 billion to buy Rockwood last year. (Reporting by Rosalba O‘Brien; Editing by Bill Trott)