SANTIAGO, March 9 (Reuters) - Chile on Friday approved an increase in U.S. miner Albemarle Corp’s annual lithium production limit in the salt flats of the Salar de Atacama, freeing the company to take advantage of soaring prices for the the metal used in electric car batteries. The increase, authorized by Chilean development agency Corfo, which oversees the northern Chilean lithium deposits, allows the company to produce as much as 140,000 tonnes of lithium per year, up from a range of 60,000 to 80,000 tonnes per year. Albemarle asked for the increase last year, citing technological advancements that the company says allow it to obtain more of the mineral without needing to extract more brine, Corfo said in a statement. The Atacama salt flat is part of the so-called “lithium triangle” in Argentina, Bolivia and Chile, a region containing a large portion of the world’s lithium reserves. Investment and output have increased in recent years as demand for electric vehicles surges. Albemarle has said it could invest $1 billion in Chile over the next five years if the plan was approved. (Reporting by Dave Sherwood; editing by Jonathan Oatis)
Chile has raised Albemarle’s lithium output quota to 120,000 to 140,000 tonnes per year from 65,000 to 80,000 tonnes. The new quota positions Albemarle as a long-term cost leader and strengthens its market position, said Baird analyst Ben Kallo. The additional production stems from new extraction technology developed by the company, and doesn’t require additional brine pumping, providing low cash costs for the incremental lithium. However, Kallo did acknowledge that there could be an oversupplied lithium market in the long-term.