SANTIAGO: The government of President Sebastian Pinera has angered nationalists and political opponents by inviting private companies to mine lithium, long considered a strategic resource subject to state control.
Chile, together with Argentina and Bolivia, control 85 percent of the world's known reserves of the soft, silver-white metal used as a key component in electric cars, cell phones and computer batteries.
Only two companies in Chile currently have access to the coveted mineral, thanks to exclusive joint ventures with the state.
But the government changed course on June 12 and invited local and foreign companies to tender offers to mine the country's lithium resources.
Successful bidders will be granted rights to extract up to 100,000 tonnes of the metal over a 20 year period, in exchange for royalties paid to the government equivalent to seven percent of the total yield.
Under Augusto Pinochet's 1973-1990 military dictatorship, lithium was considered a "strategic resource" for its potential use in nuclear weapons and atomic energy.
The nuclear technology plans "did not happen nor are they expected to happen in the short term," so changing the policy "is a good idea," said analyst Jaime Gajardo of the Center for Copper Studies (CESCO).
Chile holds about 25 percent of the world's lithium reserves. The mineral is found mainly in Atacama salt flats, in the mountains of far northern Chile.
Bolivia has approximately half of global reserves, located mainly in Uyuni, the world's largest salt flat, while Argentina holds about 10 percent.
Opposition lawmakers and some experts however insist that lithium should still be treated as a strategic resource, and that the state should maintain a central role in its exploitation.
They pointed to Chile's nationalization of copper mining as an example to follow.
Prior to the 1970s, private companies controlled Chile's copper deposits. But when the government nationalized copper production Chile became an important global producer.
Today the state-owned CODELCO is the world's largest copper producing company, and Chile is the world's largest copper producer, accounting for 35 percent of the global supply.
The example is unlikely to sway Pinera, the first conservative elected president in Chile since the end of the Pinochet regime and an avid free-market advocate. Critics, especially labor leaders, believe that Pinera intends to break up and privatize CODELCO, the crown jewel of state-owned companies.
Jaime Alee, director of the Center of Lithium Innovation at the University of Chile, said that lithium is "extremely cheap and essential for car batteries," and that in Chile it is a small industry "worth less than $400 million a year."
Alee would like to see lithium batteries produced in Chile.
"There will be a point when Chile will have to decide whether it wants to continue to sell its raw materials or start to produce manufactured goods. No country has grown exclusively by selling natural resources," Alee told AFP.
Chile is currently the world's leading lithium producer, responsible for 43 percent of global production, according to COCHILCO, the state-run commission that advises the government on copper and mineral production.
It is followed by Australia (23 percent), China (14 percent) and Argentina (14 percent), according to COCHILCO figures.
Socialist Senator Isabel Allende called for the government overturn its lithium plans.
"We're calling on the government to withdraw its call for bids and instead craft a policy that gives added value and contributes to Chile's development," she said.
The call for bids would "end Chile's control over its vast lithium deposits," complained opposition Christian Democratic Senator Mariano Ruiz-Esquide.
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