Chile鈥檚 SQM (NYSE: SQM), the world鈥檚 second largest lithium producer, will from the Atacama desert to mitigate the overall impact of its operations in one of the driest places in the world.
The company, which produces lithium by pumping brine from beneath the desert and concentrating it through evaporation in pools, has committed to reduce its use of 鈥渃ontinental鈥� water by 20% from November this year. The goal, it said, is cutting water use by 50% by 2030.
To achieve its goals, SQM will have to invest $40 million in the first phase and $65 million for the second phase
To achieve those goals, the miner will have to improve production processes and increase the use of sea water. It will require an investment of around $40 million in the first phase and $65 million for the second phase.
SQM also vowed to produce carbon-neutral lithium by 2030 as part of a larger, $100 million emissions reduction drive.
The lithium miner said the announced plan should not have an impact on its near- or long-term lithium production.
鈥淭here is no trade-off between being cost-competitive and being leaders in sustainability,鈥� chief executive Ricardo Ramos . 鈥淭hese are commitments that we assume out of conviction and voluntarily.鈥�
SQM is now producing at record levels of roughly 70,000 tonnes for the year, which has allowed it to build higher levels of inventory ahead of an expected demand boom.
The company鈥檚 announcement, part of a , comes after SQM lost a high-profile legal battle in Chile.
In 2016, Chile鈥檚 environmental regulator found that SQM had extracted more brine from the salt flat than permitted. A $25 million compliance plan presented by the company was dismissed by a court in Antofagasta聽in December.
Despite the company鈥檚 appeal, local regulators forced SQM in August to start again from scratch an environmental compliance plan for its operations.
Bone of contention
Water has become a bone of contention for the expansion plans of both SQM and top competitor Albemarle (NYSE: ALB), both of which operate in the Atacama desert, the world鈥檚 driest, where more than a third of global lithium carbonate supply is sourced.
Chile, which holds about 52% of the world鈥檚 known lithium reserves, lost its聽聽in 2018.
The country, however, is working on reversing that situation. It predicts that lithium will soon become its second-largest mining asset, behind copper. The commodity is currently聽听别虫辫辞谤迟.
SQM鈥檚 own expansion plans are on track to be completed by the end of 2021, it said in August.
The company expects to extract more lithium from the same amount of pumped brine by using brine earmarked to produce potash and using higher-grade wells.
SQM estimates that Chile would be able to increase its total lithium production through such methods to 300,000 tonnes of lithium carbonate-equivalent from its current capacity of just over 100,000 tonnes.