Chile Lithium Dispute Linked to Cold War Era Nuclear Legislation

French mining group Eramet and Chile’s state-owned Empresa Nacional de Minería (ENAMI) are set for a legal confrontation that threatens to postpone the development of one of the world’s most significant lithium deposits. The dispute centres on the Salares Altoandinos project, where ENAMI intends to invest more than $3 billion alongside Rio Tinto to exploit reserves estimated to contain approximately one quarter of Chile’s total lithium resources.

The project holds the potential to produce sufficient battery-grade lithium for roughly 1.5 million electric vehicles annually and represents a key component of President Jose Antonio Kast’s economic development strategy. However, the situation has become complicated by Eramet’s acquisition of all mining rights across the area in 2023, a move designed to secure the specialised licence necessary for lithium production under Chile’s legislation dating from the Cold War period, when the metal was deemed essential for nuclear weapons manufacturing.

Whilst the French company does not currently possess the required licence, it is attempting to exploit its landholding position to negotiate a stake in the project’s development. ENAMI’s legal representatives have characterised Eramet’s actions as obstructive, stating in pretrial documentation made public in March that the company has initiated “a series of abusive administrative and court actions” intended to impede project advancement and cause compensable damages.

Eramet has lodged appeals against Chile’s selection of Rio Tinto’s $415 million proposal in last year’s competitive tender process. The French firm has publicly urged ENAMI to enter negotiations regarding the award, which is scheduled to conclude this year, whilst simultaneously filing numerous applications for easements and water extraction rights at the site.

Hubert Porte, chairman of Eramet Chile, defended the company’s position in a column published in Santiago-based Diario Financiero on 16 March, stating that whilst Eramet remains receptive to constructive solutions enabling project progression, it will continue to protect its rights as a mining concessionaire.

Should neither party prove willing to compromise, the dispute could require at least two years to navigate through the Chilean court system and potentially progress to international arbitration. Some mining lawyers practising in Chile have expressed concern that ENAMI’s approach to mining claims may border on expropriation.

Ignacio Errazquin of Santiago law firm CMS Carey & Allende noted that ENAMI has assumed considerable risk by not mandating that its strategic partner hold mining claims over the relevant area. Eramet controls 1,200 square kilometres of claims covering 99 per cent of the La Isla and Aguilar salt flats in northern Chile’s Atacama region, forming part of a strategic pivot towards energy transition metals. The company seeks to achieve operational synergies with its $900 million Centenario facility located across the Andes in northwest Argentina, which commenced production in late 2024.

Chilean authorities have estimated that Salares Altoandinos hosts approximately 4.5 million tonnes of lithium following exploration activities conducted in 2025, although no formal resource statement has been published. ENAMI chief executive Ivan Mlynarz stated in March, following the latest exploration results, that the project can now be classified with certainty as world-class in scale.

The project represents the latest partnership between the Chilean state and private investors as the country pursues plans to double lithium output to approximately 500,000 tonnes annually by 2035. Mlynarz indicated that following exhaustive analysis, Rio Tinto’s proposal was judged to deliver the greatest value to ENAMI. Rio Tinto’s offer encompasses cash consideration as well as access to its direct lithium extraction technology and the pilot plant at its Rincon operation in Argentina. This marked Rio Tinto’s second significant Chilean award in less than two months, following a similar agreement with state copper producer Codelco for the Maricunga project.

The immediate risk is that prolonged legal proceedings with Eramet could entangle the Altoandinos project in years of court disputes. ENAMI’s court filing asserted that having participated unsuccessfully in the competitive process, Eramet is now challenging the entire basis of the tender. The mining properties that Eramet sought to leverage as an advantage for selection are now being deployed to obstruct the project, according to ENAMI.

Having concentrated exclusively on lithium, Eramet has now raised the prospect of extracting other elements present in the brines, including boron, iodine and potassium. ENAMI has requested that judges compel Eramet to disclose internal communications and other documentation that would reveal when management altered its focus to non-metallic minerals, amongst other matters.

Irrespective of the intentions when claims were initially staked or acquired, they confer upon the holder the right to exploit any minerals in the ground except lithium, which requires a special permit known as a CEOL. In 2023, holding mining claims over the production area became a mandatory requirement. This month, the Chilean government issued the first CEOL to a private company, CleanTech Lithium, largely based on the strength of its extensive holdings at the Laguna Verde project. CleanTech chief executive Ignacio Mehech confirmed that the company owns almost 100 per cent of the claims, which constituted a requirement under the process.

A protracted dispute over Altoandinos would constitute a significant setback for President Kast, who assumed office on 11 March. His administration is looking to the mining sector to attract foreign investment and support broader economic objectives. Economy and Mining Minister Daniel Mas told journalists on 13 March that the government wishes to provide companies with the certainty required to execute their investments and achieve production in the short term, adding that authorities will examine how to align this strategy with their broader aims.