Falling Lithium Prices Derail Major Chinese Projects in Chile

Sources from Chile’s economic development agency and government confirm that Chinese firms BYD and Tsingshan have withdrawn from major lithium processing projects in Chile.

Both companies had planned to invest a combined $523 million in new plants, aiming to produce lithium iron phosphate (LFP) cathodes and batteries essential for electric vehicles.

These projects, announced with high expectations in 2023, promised to create nearly 1,200 jobs and boost Chile’s efforts to move up the lithium value chain.

Chile, the world’s second-largest lithium producer, selected BYD and Tsingshan for preferential lithium pricing deals to encourage local investment. BYD’s $290 million plant in Antofagasta was designed to make 50,000 metric tons of LFP cathode material each year.

Tsingshan, through its subsidiary Yongqing Technology, pledged $233 million for a battery plant in Mejillones, targeting 120,000 metric tons of LFP annually. A sharp drop in global lithium prices undermined both companies’ business cases.

Lithium carbonate prices, which peaked near $81,000 per ton in late 2022, fell below $10,000 by early 2025. This collapse left many projects unprofitable, with about a third of the industry operating at a loss.

Setbacks in Chile’s Lithium Strategy as BYD and Tsingshan Pull Back

Chile’s Corfo agency confirmed that the global price slump directly affected the investment decisions of BYD and Tsingshan. Bureaucratic delays also played a role. BYD cited slow progress in securing land for its plant, despite several options provided by Chilean authorities.

In January 2025, BYD filed an official withdrawal notice. Tsingshan’s project never advanced beyond the planning stage, as the company failed to legally incorporate in Chile.

The Chinese embassy in Chile publicly denied that the companies had fully abandoned their plans, stating both remained open to further talks. However, statements from Chilean officials and direct confirmations from Tsingshan indicate both projects are off the table for now.

Chile’s National Lithium Strategy, launched in 2023, aims to foster public-private partnerships and local value addition in lithium production. The retreat of BYD and Tsingshan marks a setback for this goal.

Nonetheless, Chile remains committed to attracting new investment and developing its lithium sector, even as global market volatility continues to shape business decisions.

All figures and facts in this article are based on official Chilean government statements, company disclosures, and public records. The information is current as of May 2025.