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China's BYD, Tsingshan scrap plans for Chile lithium plants

Agustín de Vicente / Mayo 7, 2025 | 22:51
Chile is the world’s second-largest lithium producer and plays a critical role in the global electric vehicle supply chain. Still, the recent withdrawals underscore the volatility of lithium markets and the challenges in securing downstream investment.

Chinese electric vehicle giant BYD and metals conglomerate Tsingshan have abandoned plans to build lithium cathode plants in Chile, according to a statement released Wednesday by Chile’s economic development agency, Corfo. The move marks a significant setback for Chile’s ambitions to add value to its lithium supply chain by boosting local processing capacity.

Corfo had selected both companies in 2023 for a special initiative that offered access to discounted lithium prices, as part of a national strategy to encourage domestic investment in battery materials. However, a sharp decline in global lithium prices appears to have derailed both projects.

“The companies selected by Corfo have been affected in their investment decisions by the global market conditions, which have shown a sharp drop in prices,” the agency said in a public statement.

Tsingshan confirmed to Reuters that it had scrapped its $233 million project, which was intended to produce 120,000 metric tons per year of lithium iron phosphate (LFP). Meanwhile, Chile’s national assets ministry disclosed that BYD submitted a formal notice of withdrawal from its proposed $290 million LFP plant back in January. That facility was expected to yield 50,000 metric tons of cathode material annually.

BYD, currently the world’s leading EV manufacturer, has not issued any public comments regarding the decision.

The planned facilities were expected to leverage lithium sourced from Chilean producer SQM under a preferential pricing agreement valid through 2030. Corfo suggested that the timeframe of the supply deal may have contributed to the companies’ change of course.

Additionally, Corfo noted procedural issues with Tsingshan’s project, stating that the company attempted to transfer development responsibilities to an affiliate that had not taken part in the original bidding process—a move deemed noncompliant by the agency.

This is not the first time that efforts to build up Chile’s lithium-based industrial base have faltered. A similar push in 2018, which also involved preferential pricing, failed to yield results after companies like Molymet, Sichuan Fulin Transportation Group, and a Posco-Samsung joint venture pulled out.

Looking ahead, Corfo has launched a second round of bidding, this time tied to lithium produced by U.S.-based Albemarle. The new program offers long-term lithium purchase agreements through 2043 for companies willing to invest in value-added projects in Chile. The agency added that Albemarle and future investors may use an “alternative form” to establish price agreements.

Chile is the world’s second-largest lithium producer and plays a critical role in the global electric vehicle supply chain. Still, the recent withdrawals underscore the volatility of lithium markets and the challenges in securing downstream investment.

 

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