The Chilean Constitutional Convention will dissolve itself today. Chile’s current constitution was written in 1980 and based its economic model
The Chilean Constitutional Convention will dissolve itself today.
Chile’s current constitution was written in 1980 and based its economic model on the extraction of natural resources. This economic strategy posed too high an environmental cost and failed to spread the benefits to all citizens—coercing many Chileans to fight for a constitutional change in 2019.
Chile is the second largest producer of Lithium, a critical mineral in technologies fueling the switch to green energy. In the past quarter, Chilean mining company Sociedad Quimica y Minera de Chile (SQM), Chile’s largest Lithium producer reported net income of $796.1 million in Q1 2022, an increase of 1,071% compared to one year earlier.
President Gabriel Boric campaigned to expand the social safety net, increase mining royalties and taxes, and create a national lithium company. The morning after his victory, the stock price of SQM fell 15%.
Expect President Boric to call for a mandatory plebiscite to be held September 4th, as he aims to implement a new constitutional reforms and nationalize lithium production. In the long-term, Boric will need to successfully distribute the wealth from lithium mining to the people or face further social unrest.