Codelco’s Strategic Move
Chief executive Ruben Alvarado of Codelco recently revealed advancements in negotiations with local communities regarding lithium mining, showcasing the company’s commitment to garnering community support.
The mining giant has engaged in discussions with indigenous groups to finalize details of a new joint venture mandated by the state in the Atacama salt flat alongside SQM.
In 2023, Chile contributed to approximately 24% of global lithium mine production.
Moody’s Positive Projection
With the electric vehicle (EV) industry continuing to show a strong interest in lithium, Moody’s anticipates sustained demand for the mineral despite recent price fluctuations.
“Codelco is poised to emerge as a key producer of vital commodities essential for the global energy shift,” stated Barbara Mattos, a corporate analyst at Moody’s.
She further highlighted that while venturing into the lithium market will necessitate capital investment, it could potentially strain Codelco’s credit quality.
Factors Affecting Credit Ratings
Last year, Moody’s downgraded Codelco’s credit ratings due to reduced production levels and escalating costs, assigning the state-owned copper producer a negative outlook.
S&P Global Ratings followed, lowering the miner’s credit rating by two notches in December.
Future Lithium Market Outlook
Despite concerns about a potential surplus impacting lithium prices in the short term, analyst Martina Gallardo from Moody’s predicts a supply-demand equilibrium by 2025.
Gallardo emphasized a positive long-term outlook, foreseeing a significant surge in lithium demand by up to 150% by the end of this decade and nearly quadrupling by 2050.
She expressed confidence in the resilience of the lithium market amid fluctuations, underscoring the enduring growth trajectory.
(With files from Reuters)
