The bidding process for the exploitation of lithium begins…

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The bidding process for the exploitation of lithium begins and the regulation of special operating contracts is established

A. BIDDING FOR THE EXPLOITATION OF LITHIUM

On October 13, 2021, the national and international call for bids for special lithium operation contracts (CEOL) began, the bases of which can be purchased at https://www.minmineria.cl/litio/ .

The objective of the tender is to grant extraction quotas for up to 400,000 tons, divided into 5 quotas of 80,000 tons each, in which bidders may be awarded up to 2 quotas (160,000 tons).

Offers will be received until December 17, 2021 and results will be published on January 14 of next year.

B. SPECIAL CONTRACTS FOR THE OPERATION OF LITHIUM

On the other hand, Supreme Decree No. 23 of the Ministry of Mining was published in the Official Gazette, which establishes the requirements and conditions that CEOLs must meet, to be signed on the occasion of the tender (Decree).

The most relevant conditions that CEOLs must include are the following:

1. Parts

The State of Chile, represented by the Ministry of Mining (Ministry) and the corresponding awardee (Contractor), who may be one or more national or foreign legal entities, or a consortium formed by them.

2. Purpose

The Contractor may explore, exploit and benefit from their respective quota or quotas, in exchange for a specific annual payment to the State of Chile.

3. Payment to the State and Remuneration to the Contractor

to. The specific annual payment will be equal to the value resulting from multiplying the “annual operating profit” by the “effective rate”, determined in accordance with Table 1 and the formulas included in the Decree.
b. The aforementioned payment must be made every April 30, at the latest.
c. Once the specific annual payment has been made, all income received by the Contractor will be the property of the Contractor, without prejudice to its tax obligations.

4. Maximum validity

to. 29 years from the date of the full processing of the administrative act approved by the CEOL, or until the assigned production quota is reached, whichever occurs first, without prejudice to the grounds for early termination established in the Decree.
b. Notwithstanding the foregoing, the Contractor must start the exploitation of its quota within the following 7 years, counted in the same way indicated above, a period that may be extended for 2 years, for well-founded reasons. To guarantee the start of the exploitation, the Contractor shall grant in favor of the Undersecretariat of the Ministry one or more guarantee certificates, first requirement insurance policies or any other instrument payable on demand.

5. Administration and supervision

The administration of the CEOL will correspond to the Ministry, while its execution will be supervised by a Coordination Committee, made up of a regular member and an alternate member from each party.

6. Duty to market

to. The Contractor will be responsible for commercializing, in the national or foreign market, all the marketable metallic lithium products obtained on the occasion of the CEOL, such as lithium carbonate, hydroxide, bromide, or chloride and other derivative products or compounds of said mineral. . The Contractor may not commercialize brines.
b. During the execution of the CEOL, the quantity and quality of the lithium produced by the Contractor will be verified by a qualified inspector, appointed by the Contractor according to a list prepared by the Coordination Committee.

7. No Assignment

The CEOL will not be assignable, except with prior authorization from the Ministry.

8. Legislation and dispute resolution.

to. The CEOLs will be governed by Chilean law and any controversy between the parties must be resolved amicably, or failing that, by the Ordinary Courts of Justice of the Santiago commune.
b. Faced with differences of a technical or financial accounting nature, the parties may submit the dispute to three experts appointed by common agreement. Any recommendation of the experts is binding on the parties, without prejudice to their right to resort to ordinary justice.

CONTACT

Fernando Bravo V.
Partner
fbravo@prieto.cl

Federico Rodríguez M.
Director
frodríguez@prieto.cl

Andrés Maldini G.
Lawyer
amaldini@prieto.cl

Jorge Echeverría B.
Lawyer
jecheverria@prieto.cl

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