Moody’s, the credit rating agency, suggested last week that Chile’s struggling state-owned copper giant, Codelco, could enhance its business profile and cash flow by venturing into the lithium market.
Chile’s government has directed Codelco to increase state control over the country’s lithium industry through partnerships with private firms.
Despite recent price declines in lithium, driven partly by increased production, Moody’s remains optimistic about the sector’s prospects, especially with the continued growth of the electric vehicle (EV) industry.
Barbara Mattos, a corporate analyst at Moody’s, highlighted that Codelco’s foray into lithium wouldn’t immediately impact its credit rating but could potentially strain its credit quality in the future due to the need for additional capital investment.
Codelco, already grappling with high debt and project delays, faces the challenge of maintaining its investment momentum to meet future copper demand. Chile’s vast reserves of copper and lithium position the country as a crucial player in the global energy transition.
Martina Gallardo, a lithium analyst at Moody’s, acknowledged the short-term volatility in lithium markets but anticipated a supply-demand balance by 2025.
Despite the current surplus, long-term projections indicate a significant surge in lithium demand, with estimates suggesting a 150% increase by 2030 and nearly quadruple by 2050.
