CleanTech Lithium (CTL) , a Chile-focused lithium explorer, said it has resubmitted applications for Special Lithium Operating Contracts (CEOLs) for its Laguna Verde and Francisco Basin projects in northern Chile. The CEOLs are required by the government to comply with its recently updated National Lithium Policy whereby private developers interested in salars outside specially designated "strategic" areas must apply for development permits.
CleanTech originally applied for CEOLs in September 2023 with support from local communities. The new submissions contain minor changes to comply with the latest requirements, but will otherwise have no impact on expected project timelines for CTL's two flagship projects in Chile.
To give more context, last week the Chilean government outlined a new process for private companies to express interest in the development of "non-strategic" salars for lithium production in Chile, starting from April 2024. These assets must be located outside the government's newly designated "Protected Salars Network". CleanTech Lithium's assets fall outside of this category and are therefore not directly affected by the recent government action.
It is expected that c. July 2024, the Ministry of Mining will list the salt flats where there is private sector interest, and those may require local indigenous consultation before works can proceed. After July, CEOLs will be awarded specifying the terms and conditions for commercial development.
Last week, CleanTech Lithium CEO Aldo Boitano met with Chile's Mining Undersecretary to discuss the recent changes. The CEO commented:
"We were delighted to attend this meeting with the Mining Ministry so soon after the new approach had been announced by the Government, one of the first companies to have such conversations. Under this new guidance from the Government, we will proceed with our project's CEOL applications and continue our constant coordination with the government to develop our projects into production."
View from Vox
A positive and expected update from CleanTech as it resubmits applications for CEOLs (development permits) in Chile in accordance with the government's updated mining policy. There is no change to the development schedules of CTL's Laguna Verde and Francisco Basin projects, and we expect the permits to be granted by Q3 2024 per the government's official schedule.
CleanTech is in an excellent position to develop its assets in Chile under the current regulatory environment. For one, the company is a pioneer of DLE technology in Chile and has committed to using 100% renewable energy in its lithium extraction and processing. DLE is a more modern and sustainable method of extracting lithium with significant environmental and cost benefits. CleanTech's approach is aligned with Chile's National Lithium Strategy, which mandates the use of DLE.
Furthermore, CleanTech has made tangible efforts in the area of community engagement, and gained the unified support of local communities. In December 2023, the company announced an alliance with the Colla territorial communities for the first co-created mining model for lithium extraction in Chile. As part of the CEOL approval process, the Chilean government will likely carry out local community consultations, which CTL is very well positioned for.
Overall, the government's recent announcement clarifies its National Lithium Strategy, which is good news for CleanTech as it removes uncertainty and further derisks its two projects in the country. In the likely event that the government enters a partnership with CleanTech, we expect significant near-term upside as the company's two projects are streamlined toward production within the next 3 years.
While the permitting process is underway, Laguna Verde's Pre-Feasibility Study and Environment Impact Assessment are progressing, being key value inflection points for the project in 2024. The government has said it expects 4 new lithium projects to be in production in 2026, which should include Laguna Verde as it is among the most advanced new lithium projects in Chile. As a result of the new policy, the government projects lithium production in the country to increase by 70% by 2030 and 100% by 2034.
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