Chile Lithium 2026: Deals, Policy Shift and Race to Stay No. 2

RioTimes Deep Analysis | Series: The Global Lens

Chile holds 40% of the world’s lithium reserves but produces only 25% of its supply. The gap between what lies underground and what reaches the market defines the country’s lithium challenge in 2026 — and the political transition underway may reshape how it is addressed.

Chile lithium in 2026 is defined by a paradox. The country sits atop some of the richest and cheapest-to-extract lithium deposits on Earth — the Salar de Atacama’s brines have among the highest lithium concentrations globally, with production costs of $2,500–$3,000 per tonne versus $8,000–$12,000 for hard-rock mining in Australia. Yet Chile has steadily lost market share for a decade, held back by regulatory restrictions dating to 1979 that classify lithium as a strategic state asset and bar standard mining concessions. In 2026, a new government, a landmark joint venture, and billions in fresh investment are converging to determine whether Chile can reverse that decline.

The Production Picture

Chile produced an estimated 64,100 tonnes of lithium in 2025, and output is projected to rise 4.9% to 67,300 tonnes in 2026, according to Mining Technology analysis. All current production comes from a single location — the Salar de Atacama — operated by just two companies: SQM and Albemarle. No other country with Chile’s reserves has such a concentrated production base.

SQM is expanding lithium carbonate capacity to 240,000 tonnes by 2026 and lithium hydroxide to 100,000 tonnes. Albemarle has filed for environmental review of a $3.1 billion direct lithium extraction (DLE) project — the largest lithium investment currently under review in Chile — that would nearly double recovery rates while returning 90% of processed brine to the salt flat.

NovaAndino Litio: The Mega-Deal

The most consequential development in Chilean lithium is a corporate structure, not a mine. In December 2025, state-owned Codelco and SQM formally launched NovaAndino Litio SpA, a joint venture that will control all lithium development in the Atacama through 2060. Codelco holds 50% plus one share — giving the state majority control — while SQM contributes its operating assets, permits, workforce, and commercial network.

The deal was approved by over 20 regulatory authorities across Chile, China, Brazil, Saudi Arabia, and the European Union. Chile’s Supreme Court cleared the final legal hurdle in January 2026. The Chile Nuclear Energy Commission (CCHEN) authorized Codelco to extract up to 2.5 million metric tonnes of lithium metal from 2031 to 2060, with potential expansion to 3 million tonnes pending additional environmental permits. Annual production could reach 330,000 tonnes of lithium carbonate equivalent — a 65% increase from current levels.

Rio Tinto at Maricunga: The Second Front

Chile’s lithium ambitions extend beyond Atacama. In May 2025, Codelco signed a partnership agreement with Rio Tinto to develop the Salar de Maricunga — home to one of the world’s highest-grade lithium brine deposits but never commercially mined. Rio Tinto will invest up to $900 million for a 49.99% stake, with Codelco retaining majority control. The project targets first production by 2030 using DLE technology.

Beyond these two flagship projects, the outgoing Boric government fast-tracked new lithium contracts covering five additional salt flats — Ascotán, Quillagua Sur, Hilaricos, Piedra Parada, and Agua Amarga — with submissions to Chile’s comptroller in March 2026. State-owned Enami signed Chile’s first Special Lithium Operating Contract (CEOL) in September 2025 for the Salares Altoandinos project, targeting production by 2027.

The Kast Policy Shift

President José Antonio Kast took office on March 11, 2026, inheriting a lithium framework designed by his predecessor. His early signals suggest a shift. One of his first structural decisions was merging the Ministries of Mining and Economy into a single portfolio — a move widely interpreted as aligning mining policy with broader investment and competitiveness goals rather than state resource control.

Kast has argued that Chile’s lithium framework concentrates access among too few operators, constraining competition and discouraging private investment. Manuel Viera, president of the Chilean Mining Chamber, told Mining.com that Chile could reclaim the global No. 1 position within a decade if it repeals restrictions and adopts a more pro-investment framework. The tension between Boric’s state-centric model and Kast’s market-oriented instincts will define Chile’s lithium trajectory for years.

The Global Competition

Chile’s market share challenge is real. Australia overtook Chile as the world’s largest producer in 2011 and has not looked back. Argentina — with a far more permissive regulatory framework under Milei’s RIGI investment regime — is scaling lithium production rapidly across its portion of the “lithium triangle.” China has expanded domestic production and locked in African supply chains. Cochilco projects Chile’s global share could fall from 23% to 17% by 2030 without new production capacity.

The government’s stated goal is to lift annual output from 280,000 tonnes (2024) to 430,000 tonnes by 2034. That would require bringing multiple new salt flats online — projects that, given typical development timelines of 5-7 years, need investment decisions in 2026-2027 to meet the target.

The Price Environment

Lithium prices collapsed from nearly $70,000 per tonne in 2022 to roughly $10,000-$12,000 by late 2024, creating a challenging environment for new project economics. Modest recovery is expected, but global oversupply — estimated at 141,000 tonnes in 2025 — continues to weigh on prices. Chile’s cost advantage means its existing operations remain profitable even at current levels, but higher-cost rivals have deferred or cancelled projects.

For Chile, the low-price environment is paradoxically an opportunity. The country’s brine-based production costs of $2,500-$3,000 per tonne are the lowest in the industry. If competitors withdraw or slow expansion, Chile can capture share — provided its regulatory framework allows fast enough scaling.

What to Watch

Kast’s mining policy direction. Will the new government amend the Mining Code to allow private concessions for lithium, or will it work within Boric’s state-partnership framework? The answer determines whether Chile attracts a wave of new entrants or remains a two-operator market for another decade.

NovaAndino’s integration phase. The 2026-2030 period is critical. Codelco and SQM must merge operational systems, harmonize production processes, and deploy DLE technology at industrial scale — all while maintaining output at an asset that currently generates billions in revenue.

DLE technology at scale. Both NovaAndino and Albemarle’s $3.1 billion TED project are betting on direct lithium extraction — a technology that promises higher recovery and less water use but has never operated at full industrial scale anywhere. If it works, Chile leapfrogs competitors. If it stalls, expansion timelines slip.

The China factor. Chinese firm Tianqi holds a 22% stake in SQM — and therefore in NovaAndino. Chinese antitrust approval was the last hurdle cleared for the joint venture. As geopolitical competition over critical minerals intensifies, Chile’s ability to balance Chinese capital, U.S. strategic interests, and European demand under the EU-Mercosur deal will shape the lithium sector’s international positioning.

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