With this, the American mining company will have the option to increase its production quota to the extent that it implements new production technologies, and only after consultation with the indigenous communities of the Salar de Atacama and the necessary environmental and sectoral permits.

The friendly agreement between the parties --the Production Development Corporation (Corfo) and Albemarle Ltda.-- comes after an Arbitration Trial that they had been maintaining since 2021 at the International Court of Arbitration of the International Chamber of Commerce (ICC).

The agreement, which contemplates the payment of US$15,158,993 by Albemarle and the waiver of both parties to exercise future actions regarding the calculation and payment of commissions that generated the controversy, also incorporates modifications to the exploitation contract (called “Annex 2024 ") that improve its development and regular operation in very relevant aspects for the future of the Salar de Atacama.

This was indicated in a press release from Corfo, which highlights that the agreement was signed on April 26, although it was only made public today.

“The adjustments in the contracts reflect the agreements reached to perfect the mechanisms to calculate the commissions that the North American company must pay to the Corporation for the exploitation of lithium, without implying changing the price range scheme and progressive and marginal rates already defined in 2016. But along with this, a series of clauses are also established that allow projecting production with higher standards of sustainability in the Salar de Atacama, in line with the definitions of the National Lithium Strategy (ENL), presented in April of last year by President Gabriel Boric,” the executive vice president of Corfo, José Miguel Benavente, highlighted in the statement.

ANNEX 24

Among the most relevant modifications contained in “Annex 2024” are the incorporation of contractual and environmental auditors who report to the parties regarding adequate compliance with payments and environmental obligations.

The latter is reinforced with a new clause on environmental compliance that contemplates the implementation of an online monitoring system; the collaboration of Albemarle in the development of studies led by Corfo; the delivery of technical, productive, geological, hydrogeological and environmental information; and the company's commitment to participate and work jointly with Corfo and/or with other actors in the Salar de Atacama basin in the development of a comprehensive hydrogeological model and/or integrated monitoring of the entire Salar, among other aspects.

In line with the objectives of advancing the sustainability of the industry promoted by the National Lithium Strategy, two new clauses are also added that commit the company's best efforts to the use of clean energy and to reduce industrial water requirements in its productive processes until their total replacement by alternative solutions.

NEW QUOTA OPTION

In the agreement, Corfo and Albemarle also agreed to a new clause that establishes an option that would allow the company to expand its production quota by 240,000 tons of Lithium Metal Equivalent (LME), as long as it tests and validates the use of new environmentally friendly technologies that are more sustainable (such as direct extraction or DLE). To do this, once the company expresses its intention to use the option, Corfo must carry out an Indigenous Consultation Process and the company must meet other prior requirements to access the new quota, in addition to the one agreed in 2016.

“Among the conditions agreed upon with Albemarle is the development of pilot projects that confirm that the implementation of new extraction technologies allows achieving efficiency levels of at least 60% in lithium recovery. And all of this must be accompanied by the company obtaining Environmental Qualification Resolutions (RCA) and authorizations from the Chilean Nuclear Energy Commission (CCHEN), in addition to the delivery to Corfo of an investment plan. associated with the project,” explained Benavente.

The executive vice president of Corfo added that “prior to the definitive closing of the agreement that puts an end to the arbitration, the Council of Atacameños Peoples (CPA) was also informed about the main contractual improvements.”

VALUE ADDED

Although the amounts committed in the 2016 contract as Contributions for Research and Development (R&D) are maintained, the recent agreement expands the scope for the use of these resources, including environmental conservation. Albemarle also undertakes to make its best efforts to sell lithium products or other products to R&D entities, at market prices and conditions, and undertakes to cooperate and collaborate in matters of development of new technologies, development of knowledge, technology transfer, piloting and all those initiatives aimed at generating exchange spaces with Corfo or another entity designated by it, such as the future Lithium and Salares technological institute.

Annex 2024 also adjusts the “Preferential Price” clause agreed in 2016, in order to improve its implementation. Thus, once the modifications come into effect, Chilean and foreign companies established in Chile ("Specialized Producers" of lithium products) will be able to agree in a better way and with greater flexibility with Albemarle for a long-term supply of lithium carbonate (hydroxide of lithium and lithium chloride to the extent that the company produces these last 2 products). That allows the development of projects with greater added value for the country, another very relevant aspect within the framework of the National Lithium Strategy.

The rest of Albemarle's commitments agreed in 2016, such as payments on the final consumer market price outside the group, the contractual validity period until 2043, the purchase options on the assets in the Salar de Atacama, and the causes of early termination of the contract, remain unchanged.

INTERNATIONAL ARBITRATION

The Production Development Corporation is the owner of mining properties located in the Salar de Atacama, part of which are currently exploited by Albemarle Ltda. under an exploitation contract signed by Corfo on August 13, 1980 with the North American company. “Foote Minerals Company”, today Albemarle US Inc., modified on November 25, 2016.

On February 19, 2021, Corfo submitted a request for arbitration before the International Court of Arbitration of the International Chamber of Commerce due to the differences between the parties regarding the calculation of commissions, requesting payment of the differences that in the opinion of the Corporation had occurred in 2020. It also included all those that occurred during the course of the trial, in addition to all other rights and compensation.

The recently reached agreement settles these differences and will come into force once the arbitration court issues the ruling that puts an end to the arbitration and the Comptroller General of the Republic carries out the process to approve Annex 2024.