Home Society Q&A: How to create a sustainable lithium supply chain for a carbon neutral world?
Q&A: How to create a sustainable lithium supply chain for a carbon neutral world?

Q&A: How to create a sustainable lithium supply chain for a carbon neutral world?

by host

Chile’s Atacama Desert hides a precious secret—salt flats packed with lithium, a key component in the batteries that power electric vehicles and other gamechanging green technologies. Striving to meet this demand, mining companies are converging on the “lithium triangle” spanning Chile, Argentina and Bolivia. Deposits are abundant, but extracting them sustainably remains a challenge. The possible impact of lithium production on the local environment and neighboring communities are relevant concerns that must be taken into consideration.

SQM, the world’s largest lithium producer by volume with more than 25 years of experience in lithium production in Chile’s Salar de Atacama region, has continuously improved production processes, adapted technologies and strengthened its cooperation with local communities in order to respond to those concerns.

As production scales, to support the planet’s transition to a low carbon mobility, pushing toward the highest standards of mining and transparency is fundamental. SQM has partnered with local communities to support social development and local employment in the region. Independent audits and an online environmental monitoring system hold SQM accountable for progress in reducing its ecological footprint.

Lithium demand will continue to rise as global vehicle fleets electrify, but the public will not accept negative tradeoffs. Ahead of COP28, José Miguel Berguño, senior VP of sustainability & corporate services at SQM, spoke with POLITICO Studio about the company’s commitment to balancing high lithium output with minimal environmental impact in Atacama’s salt flats, or the Salar de Atacama — and why sustainably sourced lithium is not only vital for global decarbonization, but also generating a positive impact for the surrounding region, its inhabitants and the nation.

Q: Why are lithium batteries so important for global decarbonization efforts?

A: Lithium-ion batteries are absolutely fundamental to reducing emissions globally through electric vehicles. To make widespread adoption of electric vehicles a reality, we need high-quality lithium produced in the most responsible and sustainable way possible. It is a massive challenge that requires collaboration across many sectors. Battery technology needs to keep improving. And companies like ours that produce lithium must innovate to make mining and processing greener. By focusing intensely on minimizing our environmental footprint and emitting less carbon dioxide, lithium producers can help drive progress on decarbonization goals.

Q: Can you discuss SQM’s plans to ramp up lithium production while ensuring sustainability?

A: We have significantly increased our lithium carbonate production capacity in recent years, from around 50,000 tons annually just four years ago to 180,000 tons last year. And we expect to reach 210,000 tons by next year. This rapid growth is driven by growing lithium demand, but sustainability remains an equally important priority. Even as our production increases, we have managed to reduce our brine consumption from the Salar de Atacama basin by close to 25 percent and water consumption by more than 50 percent. This huge improvement in water efficiency comes from extensive R&D and new technologies we have implemented. For example, we recycle water in our operations and use advanced technologies to improve recovery rate from the reduced amount of brine. We are also innovating to boost lithium yields from the brine.

Looking ahead, we plan to grow our operations globally, including a major new lithium project in Australia. This will help us meet rising global demand.

Q: What does responsible and transparent mining mean to SQM?

A: For us, responsible mining starts with upholding our core duty to people—our employees, communities near our operations and society more broadly. We aim to use natural resources in ways that sustain them not just today but for future generations. Reducing our environmental impact is crucial. We have implemented numerous initiatives to cut water and energy use while measuring our progress through robust metrics. And we forge strong bonds with neighboring communities listening to their perspectives and integrating them economically through our lease agreement with the Chilean development agency CORFO—which owns the mining rights in Salar de Atacama—local hiring and suppliers. In addition, SQM has been carrying out a range of projects with the communities throughout the Salar de Atacama region that aim to improve social conditions in areas such as infrastructure, water, energy, health, education and cultural heritage. SQM’s support consists of investment and transfer of technical know-how, with the communities defining and executing the projects themselves.

Transparency is equally important. We believe in open and honest communication about our practices. For instance, we publicly share details on the extraction of brine and water in the Salar de Atacama and how we use it. And we subject ourselves to rigorous third-party audits, implementing improvements based on the feedback. For example, SQM’s Salar de Atacama operation was the first lithium mining site to achieve IRMA 75, demonstrating our deep commitment to responsible mining practices. In 2022, IRMA’s standard for Responsible Mining commenced independent, third-party assessment of our Salar de Atacama facility. The process and result verify our strong commitment to water conservation, waste management and other sustainability indicators. Aspiring to meet comprehensive and rigorous standards like this motivates us to continually improve. SQM is also part of the United Nations-led global Race to Zero campaign, in line with the company’s goal to produce net-zero lithium by 2030, and we are also a member of the Global Battery Alliance.

Overall, combining reduced environmental impact, community engagement, transparency and ethical behavior reflects our vision for responsible mining.

Q: In what ways does SQM aim to create value for Chile more broadly?

A: Our work generates substantial value across three spheres—social, economic and environmental. Socially, we provide stable, quality jobs for Chileans and have implemented many outreach programs to improve lives in northern Chile where we operate. For instance, our Atacama Fertile Land initiative shares farming expertise and resources with local growers to cultivate robust crops in the arid climate. We also sponsor community programs that promote health, family and cultural values, and partner with local NGOs to facilitate better access to science education.

Economically, we make sizable tax contributions to the Chilean state, around $5 billion just last year, supporting health care, education, infrastructure and more. We also work extensively with Chilean suppliers and contractors, catalyzing economic activity especially in northern regions. Given the importance of its operations in Northern Chile, SQM engages with local and regional government authorities, indigenous communities and local stakeholders to understand local needs and concerns, fostering positive relationships and aligning its social initiatives with the government’s objectives.

We have also signed agreements with local universities to advance the development of battery material production and recycling locally, as well as to upskill the workforce.

Environmentally, our lithium is a key component of the global transition to electric vehicles and emissions reduction. Our other products, such as iodine and potassium nitrate, provide benefits related to health care and sustainable agriculture.

Q: Why is it valuable for SQM to participate in global forums like COP28?

A: COP28 will be a crucial turning point for the world to unite around tangible climate action and propose realistic solutions. Achieving this will require cooperation among civil society, governments, industries and sectors, and SQM wants to contribute to this. Our aspiration is to serve as a model for the sustainable production of lithium at scale in order to power the worldwide transition to renewable energy. Events like COP28 offer a tremendous opportunity to engage with stakeholders and peers across lithium, mining and other industries to share best practices on sustainability. We are always seeking to improve our responsible mining practices. Ultimately, facilitating this kind of knowledge-sharing and collaboration across organizations and sectors will help raise the bar for the entire lithium and mining industry.

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