SANTIAGO, Chile : The Chilean government has formally finalized the royalty and fiscal terms for the landmark partnership between state copper giant Codelco and private lithium miner SQM (Sociedad Química y Minera de Chile). The agreement, which establishes the joint venture entity NovaAndino Litio, marks the most significant shift in the nation’s “National Lithium Strategy” to date, securing a 70% share of operating margins for the state through 2030.
The finalization follows years of negotiations and legal challenges, effectively cementing Chile’s position as a dominant, state-led player in the global battery metals market. By resolving the fiscal framework for the 2026-2030 period, the Boric administration has cleared the path for a massive infusion of capital into the Atacama salt flats, aiming to nearly triple the country’s lithium revenues by the end of the decade.
The 70% Margin: A New Fiscal Benchmark
Under the terms finalized this week, the Chilean treasury will receive 70% of the operating margin generated by NovaAndino Litio during the initial phase of the partnership, spanning from 2025 through 2030. This revenue stream is structured as a combination of corporate taxes, specific lithium royalties, and direct profit sharing through Codelco’s majority stake.
This fiscal arrangement is designed to capture the “windfall” profits associated with high lithium prices while ensuring the state maintains a primary role in resource wealth distribution. For SQM, while the 70% capture represents a significant portion of current earnings, the trade-off is long-term stability. The agreement grants the company an extension of its extraction rights in the Atacama until 2060, a move that provides the necessary horizon for multi-billion dollar technical upgrades and sustainable extraction investments.
Industry analysts suggest that this high-royalty model may set a precedent for other resource-rich nations in South America’s “Lithium Triangle.” However, the complexity of the Chilean model: balancing state ownership with private operational expertise: remains unique.
Table: Projected Revenue Growth from Chilean Lithium Royalties (2024–2035). Data suggests an increase from $2.7 billion to nearly $9 billion.
Overcoming Legal and Regulatory Hurdles
The path to finalization was not without significant friction. The deal faced a high-profile legal challenge from Tianqi Lithium, a major SQM shareholder, which argued that the Codelco partnership should have been put to a full shareholder vote. In early 2026, Chile’s Supreme Court rejected Tianqi’s final appeal, ruling that the strategic alliance fell under the operational purview of SQM’s board and the state’s developmental mandates.
Furthermore, the Comptroller General of the Republic issued the final stamp of approval on the contracts between Corfo (Chile’s economic development agency) and Codelco’s subsidiary, Minera Tarar. This regulatory clearance was the “last mile” requirement for the association agreement to become legally binding.
The resolution of these disputes is seen as a critical signal to international markets. After a period of uncertainty regarding the global battery revolution and the role of private capital in Chile, the finalization provides a roadmap for how public-private partnerships will function under the current administration.
Governance and the Transition to State Control
The governance structure of NovaAndino Litio is a tiered arrangement that gradually shifts power toward the state. In the first phase (2025–2030), SQM will maintain a high degree of operational management, leveraging its decades of technical experience in the Atacama. However, Codelco will hold a majority of the shares (50% plus one) and will have a significant presence on the board of directors.
Starting January 1, 2031, the balance of power shifts decisively. Codelco will assume full control of the operations, with SQM transitioning into a minority partner role that continues through 2060. This phased handover is intended to prevent production dips that often accompany sudden changes in mine management.
For Codelco, the world’s largest copper producer, the entry into lithium is a diversification necessity. As the company faces challenges in its core copper division, the lithium joint venture offers a high-margin revenue stream that is decoupled from copper price volatility. This move aligns with broader trends seen in our copper deficit forecast 2026, where major miners are scrambling to secure “green transition” metals to hedge against aging traditional assets.
Impact on the Atacama and Sustainable Extraction
A core component of the finalized agreement is the commitment to “Direct Lithium Extraction” (DLE) and reduced water consumption. The Atacama salt flats are among the most arid places on earth, and traditional evaporation ponds have come under intense scrutiny for their environmental footprint.
The 2026-2030 terms include specific milestones for the implementation of new technologies. NovaAndino Litio is mandated to transition toward more sustainable methods that reinject brine back into the salt flat, maintaining the hydrological balance. This focus on ESG (Environmental, Social, and Governance) standards is not merely a regulatory hurdle but a commercial imperative. Global EV manufacturers are increasingly demanding “low-carbon” and “water-conscious” lithium for their supply chains.
Market Implications and Regional Competition
Chile’s move to lock in these terms comes at a time of intensifying competition. Australia remains the world’s largest lithium producer, primarily through hard-rock spodumene, while Argentina has aggressively courted private investment with a more liberalized mining code.
By finalizing the SQM-Codelco deal, Chile is betting that its superior brine quality and established infrastructure will outweigh the perceived risks of state intervention. The government aims to boost lithium-derived revenues from approximately $2.7 billion in 2024 to $7.3 billion by 2030, with a long-term target of $9 billion by 2035.
Investors looking for stability in the sector often look at mining picks to buy now to see how regulatory certainty impacts share prices. The finalization of these terms is expected to provide a “valuation floor” for SQM, removing the existential threat of contract non-renewal that had dogged the company since 2023.
Looking Ahead: The 2026–2030 Outlook
As the morning news block for April 8, 2026, highlights, the focus now shifts from legal paperwork to operational execution. The industry will be watching NovaAndino Litio closely to see if a state-run copper giant and a private lithium veteran can effectively co-manage the world’s most productive lithium brine deposit.
The immediate priorities for the joint venture include:
- Scaling DLE Pilot Plants: Moving beyond small-scale testing to industrial-level direct extraction.
- Community Engagement: Finalizing profit-sharing agreements with indigenous communities in the Atacama.
- Infrastructure Expansion: Upgrading processing facilities to meet the increased production quotas allowed under the new contract.
For the global lithium market, the Chilean “peace treaty” between the state and SQM brings a measure of predictability. While the 70% take for the state is high, the 30-year extension provides the “gold standard” of tenure that major institutional investors crave.
For more deep dives into the 2026 mining outlook, view our Sitemap or check our latest analysis on Nickel’s 20% Rally.
