Chile’s lithium transition: balancing growth, sustainability, and value creation

June 19, 2026

Chile’s lithium transition: balancing growth, sustainability, and value creation 

Why this dialogue: Within the Global Battery Alliance, the Circularity & Critical Minerals Advisory Group (CCMAG) serves as a multistakeholder dialogue platform to explore the trends shaping the battery value chain. In the April dialogue, we focused on Latin America, particularly Chile, and the growing strategic importance of lithium in the global energy transition. With Chile’s National Lithium Strategy still in its early stages, the dialogue examined how the country aims to balance critical mineral resources through state participation, public–private partnerships, and long-term value creation. 

By Creta Gambillara & Kaisa Toroskainen 

 

Setting the scene: Chile’s opportunity and challenge 

Chile is a key player in the energy transition. Yet, the country sits at the centre of a paradox: while resources are abundant, supply growth remains constrained.  

 

The challenge is not geology, but the ability to scale production quickly and sustainably to meet rising demand, while managing permitting complexity, environmental concerns, and relationships with local and Indigenous communities. According to Dr. Hernán Cáceres, Executive Director of the National Institute of Lithium and Salars (INLiSa), 

“Chile has a unique opportunity to show that critical mineral development can be both strategic and sustainable, if it is supported by knowledge, collaboration, and strong institutional capacity.” 

These challenges create an opening to strengthen governance, improve transparency, and embed sustainability from the outset. Strong investor interest and a growing project pipeline highlight Chile’s long-term potential, although near-term supply growth will largely depend on existing operations. Ultimately, Chile’s success will depend on coordinated action to scale a sustainable, high-standard lithium ecosystem.  

As Dr. Hernán Cáceres stated, institutions such as INLiSa can help by tackling “the lithium development as a systemic challenge. Closing the gap between potential and production requires science, coordination, and trusted public capabilities.”  

Chile’s National Lithium Strategy aims to respond to this challenge by moving the country beyond extraction, to capture more value across the battery supply chain from refining to downstream activities, second-life applications, and recycling while strengthening environmental stewardship and community engagement.  

 

Market signals: how buyers and investors can drive responsible mining 

Stakeholders underlined that Chile’s transition must be underlined by strong standards, meaningful Indigenous consultation, protection of sensitive ecosystems, and long-term regulatory certainty. The country already benefits from a relatively strong institutional framework, alignment with international ESG and due diligence standards e.g. through the recent admission to the EITI), growing expertise in energy storage and refining, and experience with complex stakeholder engagement. 

Market demand is increasingly driving responsible mining. Investors and buyers are signaling that sustainability, transparency, and strong social and environmental practices are now central to competitiveness. Investor engagement in Chile focuses particularly on water stewardship, Indigenous rights, and stakeholder trust - issues that directly affect operational and financial risk in sensitive regions such as the Salar de Atacama. At the same time, automakers and battery manufacturers are reinforcing these expectations through long-term sourcing agreements tied to responsible production. 

 As Maxwell Homans, Shareholder Advocacy Manager at Mercy Investment Services, Inc., explained: “Downstream purchasers have shown the financial value of responsible operations, as automakers are increasingly prioritizing sourcing from third-party audited mine sites through long-term contracts.” 

 

From extraction to value creation: Chile’s partnership model for responsible lithium 

Chile’s approach to value creation is taking shape through initiatives such as Novandino Litio, a public–private partnership between SQM and CODELCO. The model reflects Chile’s push for greater state participation while leveraging private-sector expertise, strengthening governance, and creating shared value for local and Indigenous communities. Alongside scaling production, companies are focused on reducing environmental impacts, integrating new technologies, improving efficiency, and embedding international standards to drive transparency, accountability, and continuous improvement across the value chain. As Stefan Debruyne, Vice President Sustainability and Global Affairs at Novandino, emphasized, “the challenge is no longer defining the direction, but executing at scale”, ensuring responsible production practices are consistently implemented and recognized across global supply chains.  

 

Building a sustainable and circular lithium ecosystem 

A key part of the strategy is the development in 2016 of an Extended Producer Responsibility (EPR) law. Currently, the Chilean government is working on a decree that will regulate the EPR for batteries that includes battery labelling but doesn't include any steps towards the implementation of a passport yet. The framework is expected to support circularity by ensuring batteries are not only produced responsibly, but also collected, reused, and recycled. However, debates around EPR requirements for lithium-ion batteries highlight the challenge of aligning industrial growth with long-term circularity goals: weak regulation today could slow the development of future recycling and downstream systems. Sebastián Galarza, Executive Director of the Centro de Movilidad Sostenible, explained: 

“Chile can add true value to its lithium supply chain by fostering robust local and regional demand through the rapid electrification of transport.”  

Together, these shifts are positioning responsible mining not as a compliance exercise, but as a source of long-term value creation and market advantage. 

 

The missing link: the role of the Battery Passport 

Despite strong standards and improving practices, sustainability performance is not yet visible in the market in terms of product differentiation or pricing. Buyers cannot distinguish how or where materials are produced, and responsibly produced lithium is not rewarded.  

This is where tools such as the GBA Battery Passport become essential to communicate performance and enable informed purchasing and investment choices along the value chain. By providing verified, standardised data on the origin and impact of battery materials, the Battery Passport enables transparency and comparability across the value chain. It allows buyers and investors to make informed decisions and helps ensure that higher standards are recognized and valued in global markets. It can also strengthen incentives for high ESG performance and can position Chile as a preferred supplier in an increasingly transparency-driven battery value chain.  

As Stefan Debruyne explains: “Overall, advancing the Battery Passport is a way to ensure that sustainable production practices are visible, valued, and reflected in global markets.” The Battery Passport offers additional tools to scale transparency and sustainability across the value chain. Thanks to the EU Battery Regulation the foundations for Battery Passport integration are largely in place, and the focus now is on completing implementation and scaling the system in practice. 

 

What Chile’s experience offers globally 

Chile’s ongoing strategic orientation underlines potential transferable lessons for other countries regarding the conditions under which positive outcomes can be achieved across emerging lithium producers: 

• Responsible mining accelerates when standards are linked to real commercial incentives  

• Independent verification strengthens trust and stakeholder engagement  

• Standards improve operations: They drive internal change, not just external reporting  

• Long-term alignment is key: Progress requires coordination between companies, investors, and buyers  

• Inclusive governance builds legitimacy ensuring Indigenous participation and institutional coordination  

Establishing clear expectations for responsible production from the outset with tools such as the Battery Passport presents a unique opportunity for producing countries to build sustainable systems from the ground up.