TL/DR –
Products made with Chilean-mined lithium, used for electric vehicle batteries, are now eligible for US tax benefits, according to the Chilean government. This is because Chile, the world’s largest copper producer and second-largest lithium producer, is eligible for tax breaks laid out in the US Inflation Reduction Act (IRA), which includes subsidies for electric vehicles based on their battery metal sourcing. As Chile has a free trade agreement with the US, the countries have “made it explicit” that Chile is eligible for the tax breaks, with the IRA tax breaks expected to incentivize Chile’s export of raw lithium materials and other related products.
Chilean Lithium Products Qualify for US Tax Benefits
Chilean-made products utilizing lithium – a key component in electric vehicle batteries – will qualify for US tax breaks, according to the Chilean government.
Chile, the largest copper producer worldwide and second-largest lithium producer, is now eligible for tax discounts under the US Inflation Reduction Act (IRA), which provides subsidies for electric vehicles based on their battery metal sourcing.
The IRA mandates that a specific percentage of the critical metals in the battery originate from the US or a country with which it has a free trade agreement. As such, Chile’s eligibility for the tax benefits has been confirmed by both countries.
US President Joe Biden’s administration has proposed strict regulations on firms controlled by China, Russia, North Korea, and Iran. This policy affects Chilean firm SQM, whose second-largest shareholder is Tianqi Lithium, a Chinese behemoth in the lithium industry. SQM is currently finalizing a joint venture with Chilean state-run copper miner Codelco to increase state control over the lithium industry.
The IRA-based tax breaks aim to stimulate Chile’s export of raw lithium materials and more expensive cathode material and lithode byproducts. Chile has also recently launched initiatives to provide preferential pricing to those using lithium as a raw material.
—
Read More US Economic News