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A worker walks next to bags of lithium ready for export at the SQM processing plant in Antofagasta, Chile, on April 19.Rodrigo Abd/The Associated Press

Shares in Chile’s top two lithium miners, SQM SQM-N and Albemarle Corp ALB-N, slid on Friday after the Andean country, which has the world’s largest reserves of the battery metal, unveiled plans to nationalize the sector over time.

The move would see Chile, the world’s second largest lithium producer, shift to a model with the state holding a controlling interest in all new lithium projects through a public company that would partner with private mining firms.

The bid for state control in Chile reflects a wider wave of lithium nationalism around Latin America, home to the so-called “lithium triangle,” which holds the world’s largest trove of the metal essential for electric vehicle batteries.

It poses a fresh challenge to electric vehicle (EV) manufacturers scrambling to secure battery materials. Mexico nationalized its lithium deposits last year, and Indonesia banned exports of nickel ore, a key battery material, in 2020.

Chile’s young progressive President Gabriel Boric said late on Thursday in his announcement that the country would not cancel existing contracts, though it would try to negotiate with mining firms to voluntarily shift to a public-private model.

Boric is scheduled to provide more details about his plans during a talk in the northern city of Antofagasta on Friday.

In midday trading, Chilean firm SQM’s U.S.-listed shares slid some 10 per cent, while Albemarle was down over 6 per cent. SQM’s lithium contract in Chile is set to expire in 2030 and Albemarle’s in 2043, giving it more insulation from the potential move.

SQM has a larger footprint in Chile, with 81,000 hectares (about 200,000 acres) for lithium extraction compared to Albemarle’s 16,000 hectares.

In a statement, SQM it was “analyzing the strategy delivered by the government.” Albemarle said it would have “no material impact on our business” and that it would continue talks on investing in further growth and using new technologies in Chile.

Mining shares in London fell sharply too. Rio Tinto dropped by as much as 5.7 per cent at one point to its lowest in almost a month, and was last down 4.7 per cent.

Shares in rival Anglo American fell 5.9 per cent on the day, making the basic resources sector the worst performer in Europe.

In neighbouring countries in the lithium triangle, which spans Chile, Argentina and Bolivia, governments are increasingly pushing for a greater public sector stake in mining of the metal and are seeking to develop a nascent battery sector.

Argentine state energy firm YPF has got into lithium, while Bolivia has long maintained strict control over its huge though largely untapped resources. It recently gave out a lithium tender to a Chinese consortium including battery giant CATL.

Mexico’s President Andres Manuel Lopez Obrador and Bolivia’s Luis Arce have touted the idea of a regional lithium “OPEC” to coordinate on lithium policy and benefit local economies.

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