SANTIAGO – Products made with Chilean-mined lithium, essential for electric vehicle batteries, will be eligible for U.S. tax benefits, the Chilean government announced on Thursday.
As the world’s largest copper producer and second-largest lithium producer, Chile will qualify for the tax breaks outlined in the U.S.
Inflation Reduction Act (IRA), which includes subsidies for electric vehicles based on their battery metal sourcing.
The IRA mandates that a certain percentage of critical metals in batteries come from the U.S. or a country with which it has a free trade agreement. ]
Given Chile’s free trade agreement with the U.S., both countries have clarified that Chile is eligible for these tax benefits, according to the Chilean economy ministry.
The Biden administration has proposed strict thresholds for firms controlled by China, Russia, North Korea, and Iran.
In Chile, the local firm SQM’s second-largest shareholder is Tianqi Lithium, a major Chinese player in the lithium market.
SQM is currently negotiating a joint venture with Chilean state-run copper miner Codelco, aiming to increase state control over the lithium industry.
The only other active lithium producer in Chile is the U.S.-based company Albemarle.
The IRA tax breaks will encourage the export of Chilean raw lithium materials as well as more costly cathode materials and lithium byproducts, the economy ministry stated.
Additionally, Chile has recently launched initiatives to offer preferential pricing to those using lithium as a raw material.
