SANTIAGO (Reuters) - Chilean environmental regulators have rejected plans by Albemarle Corp (ALB.N), the world’s top lithium producer, to expand output from the Salar de Atacama salt flat, according to filings with Chile’s Environmental Assessment Service (SEA).
SEA said in a resolution on Monday that Albemarle’s environmental impact statement, which included plans to build a new plant to produce 42,500 tonnes of lithium carbonate in northern Chile, lacked key information to gauge the project’s impact, prompting an “early termination” of its review.
“The applicant [Albemarle] does not present the details necessary to rule out significant adverse impacts on the quantity and quality of renewable natural resources, including the soil, water and air,” the regulator concluded in the Nov. 12 resolution, which was first reported by Reuters.
The regulator said Albemarle also failed to adequately consider threats to the Peruvian tern, an endangered species of bird that inhabits the region.
Albemarle’s expansion has been closely scrutinized by regulators in Chile, who have increasingly cracked down on water use by both copper and lithium miners in the Salar de Atacama, which lies at the heart of the world’s driest desert.
The company filed the environmental impact statement in September, detailing plans to build the new plant near the northern Chilean coastal port of Mejillones, as well as six new solar evaporation pools in the salar, which lies close to the border with Bolivia and Argentina.
Albemarle has told both regulators and investors the upgrades would boost output without using more lithium-rich brine, or saltwater, from the environmentally sensitive salt flats.
The September plan modified Albemarle’s original Phase 3 plant expansion project, whose environmental impact assessment was approved in 2017, according to the Monday filing.
Albemarle Chief Executive Luke Kissam said in an earnings call last week that the Phase 3 and 4 projects were proceeding according to plan, but said the company had frozen engineering work on subsequent Phase 5 and 6 projects.
In an emailed response to Reuters, Albemarle said this week’s decision pertained to its Phase 5 and 6 projects, “which we already announced is on hold during last week’s earnings call.”
Monday’s filing rejecting Albemarle’s environmental impact statement did not appear to reference the Phase 5 or 6 projects. It was not immediately clear why there was a discrepancy between the regulatory filing and Albemarle’s response.
The company has five days to appeal the decision, SEA said in its resolution.
Plans by Albemarle and top competitor SQM (SQM_pb.SN) (SQMa.SN) to expand production at the Salar de Atacama are deemed critical to maintaining global supply amid spiking demand for lithium, a key ingredient in batteries that power everything from cell phones to electric vehicles.
Howard Klein, a lithium analyst and partner with New York-based RK Equity, said the regulatory decision suggested brine-based lithium suppliers would continue to face hurdles in boosting output.
“From a market point of view, this should be positive for lithium prices,” Klein said. “But ultimately, this is a reminder that brines are environmentally, technically and geopolitically challenging.”
In September, Chile’s nuclear commission, which oversees the sales and export of lithium in Chile, denied Albemarle’s request for an additional increase to its production quota for the ultralight battery metal. The commission said Albemarle had failed to adequately explain how it would increase production without extracting more brine.
Reporting by Dave Sherwood; Editing by Marguerita Choy and Rosalba O'Brien