Albemarle (NYSE:ALB) announced this week that it had secured the necessary permits to increase lithium brine extraction from its facilities in Chile’s Salar de Atacama. The company has also entered into a memorandum of understanding (MOU) with the Chilean government, under which Albemarle will commit to construct a third lithium carbonate production facility in the country.

A definitive agreement is expected to be executed by the end of Q1 2016.

As quoted in the press release:

The MOU provides Albemarle with sufficient lithium to support the production, over a 27-year period, of 70,000 MT annually of technical and battery grade lithium carbonate and 6,000 MT annually of lithium chloride at Albemarle’s two manufacturing facilities in La Negra, Antofagasta, as well as at a third lithium carbonate facility that Albemarle will commit to construct under the MOU.  The MOU provides for commission payments to the Chilean Government based on sales price/MT and Albemarle’s support of research and development in Chile in lithium applications and solar energy.  In addition, the MOU recognizes the principle of community value sharing and acknowledges the cooperation agreements that Albemarle has entered into with local, indigenous communities under which Albemarle provides financial support for social, environmental and economic development. Finally, the MOU provides Albemarle with an exclusive option for an additional lithium quota in connection with the development of lithium hydroxide production directly from brine.

Albemarle CEO, Luke Kissam, said:

As stewards of this resource, we are committed to the principles set forth by the Chilean National Lithium Commission, which benefits all stakeholders, especially the communities in which we operate and those committed to evolving the region’s technology leadership. Our sustainable, state-of-the-art operations allow us to maximize the amount of lithium extracted from the brine, thus increasing the value of this resource for the stakeholders.

Certainly, that looks to be good news for Albemarle. However, Joe Lowry of Global Lithium cautioned those watching the company to take Monday’s release with a grain of salt. Read his take on the news here.

Click here for Albemarle’s full press release.

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