Chilean mining firms SQM and Codelco are advancing plans to expand their major lithium joint venture, betting on sustained long-term growth in battery demand from one of the world's most significant lithium-producing regions.

According to an environmental impact study for a $3 billion operational overhaul, their joint venture, Novandino, has proposed setting an annual lithium production target of up to 470,000 tonnes. This represents an increase of over 70% compared to the company's production guidance of approximately 270,000 tonnes for this year. Novandino did not disclose a timeline for achieving this target.

This expansion plan comes amid double-digit growth in global lithium consumption, driven by demand for energy storage batteries and the electric vehicle market. Analysts note that if realized, the plan could put pressure on higher-cost competitors, particularly as a global supply surplus gradually diminishes.

However, market consultancy Benchmark Mineral Intelligence stated that the 470,000-tonne target is surprising, as the project was previously positioned primarily as an environmental upgrade initiative rather than a significant capacity expansion.

Capacity Expansion Path Requires Years of Preparation

According to filings submitted on Friday, Novandino plans a phased approach. Under the current framework, production is expected to gradually increase to around 300,000 tonnes, followed by a seven-year transition period. This phase will involve introducing new technologies, such as direct lithium extraction (DLE), to build an integrated production system and ultimately aim for the 470,000-tonne target.

Federico Gay, an analyst at Benchmark Mineral Intelligence, pointed out that reaching this capacity level will require further studies and engineering work. It also depends on adjustments to production quotas and whether direct extraction technology can meet expectations in reducing water consumption. He stated:

"Achieving this capacity will certainly take several years; it is absolutely not possible within this decade."

The partnership between Codelco and SQM is a central element of the lithium nationalization strategy promoted by Chile's previous government. It aims to increase state control over lithium resources while expanding supply from some of the world's highest-grade brine deposits.

Novandino's long-term expansion plan signifies that this strategic national asset is poised to play an even more significant role in the future global lithium market landscape.