Explainer: SQM and Chile reach lithium deal, but Atacama water woes continue

SANTIAGO (Reuters) - Chile’s environmental regulator this week approved a $25 million compliance plan by lithium miner SQM, ending a multi-year investigation by authorities that found the Chilean miner had overdrawn lithium-rich brine from the Atacama salt flat.

The case, now resolved, raised questions about how much brine and fresh water was left beneath the Atacama, and how long it would last.

Those concerns, and others, still linger. Here’s why:

WHAT IS THE SALAR DE ATACAMA?

The Salar de Atacama is a high-altitude desert basin in northern Chile that, in 2017, supplied more than one-third of the world’s lithium, a key ingredient in the batteries that power cell phones and electric vehicles.

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Rain and snow melt have for millennia washed lithium and other metals downslope, percolating into a salty solution that gathers beneath the volcano-rimmed salt flat.

Miners pump that brine into shallow rectangular lagoons, where the sun’s ultraviolet rays and the desert air evaporate the water, leaving behind the battery-grade lithium that has put Atacama at the heart of the electric vehicle revolution.

WHAT IS THE PROBLEM WITH WATER?

Soaring lithium demand has raised questions about whether the salt flat can support current and future levels of production.

The world’s top lithium miners, SQM and Albemarle Corp, share scarce water resources in the basin with BHP’s Escondida copper mine, the world’s largest, and Antofagasta’s smaller Zaldivar copper mine.

The government said last year that more of Atacama’s water was being pumped by miners than was being replaced by rain and snowfall.

A spokesman for Chile’s DGA water authority told Reuters that a benchmark assessment of the salt flat’s brine and water supply, initially due by December 2018, had been delayed until the second half of 2019.

WHAT IS THE GOVERNMENT DOING?

Chile’s water authority last year restricted new water rights in sectors of the salt flat that are currently overdrawn, citing excess pumping by the Zaldivar and Escondida copper mines.

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