Bilateral cooperation between Chile and South Korea is crucial, as they have a shared goal of boosting the global lithium value chain, Nicolas Grau, Chilean minister of economy, development and tourism, told The Korea Herald on Thursday.

“Korea needs lithium, hydrogen and clean energy fuel, and Chile needs certainty of demand, knowledge and technology to develop new industry,” said Grau, noting the situation as a “win-win” for Chile and Korea.

Grau was in Seoul from Oct. 12-14 to promote foreign investment in Chile, establish direct relationships with key Korean players, and identify specific needs to harness the expertise in the lithium sector.

He attended the 23rd Korea-Chile Economic Cooperation Committee meeting to commemorate the 20th anniversary of signing the Korea-Chile Free Trade Agreement on Thursday in Seoul.

During the visit, Grau also held talks with Industry and Energy Minister Bang Moon-kyu, Trade Minister Ahn Duk-geun, and representatives from the Korea International Trade Association (KITA), and the Korea Battery Industry Association (KBIA) to share views on expanding trade, the critical mineral supply chain, and green energy.

“High interest from related companies in the business opportunities offered by the National Lithium Strategy is confirmed and reinforced,” said Grau based on productive discussions with his Korean counterparts, the KITA and the KBIA.

"Investing in Chile is to strengthen ties between Chile and Korea in the global lithium value chain,” according to Grau.

Invest Chile is a government agency that promotes Chile for foreign direct investment and manages more than 60 projects from Asian companies, totaling over $6.15 billion.

"There is a huge opportunity for Chile and Korea,” he hoped.

Grau emphasized rigorous testing of cutting-edge lithium extraction technologies in Chile and called on specialized producers to partner with the Chilean state through its economic development agency, CORFO, to explore and exploit new salt flats, fostering value-added initiatives.

South Korea has invested $572 million in Chile as of 2021, with involvement in various sectors including trade, energy, mining, and infrastructure.

Chile finds Korean companies particularly appealing due to their sophistication and the potential contributions they can make to the Chilean business environment.

Underscoring the private sector's crucial role in Chile's lithium industry, Grau said that the Chilean government is exploring salt flats via special lithium exploration contracts with organizations like Chile National Copper Corporation (CODELCO) and Chile National Mining Company (ENAMI).

CODELCO and ENAMI are looking for private partners and special lithium operation contracts will be awarded for other salt flats eligible for lithium mining operations, according to Grau.

Speaking about Chile's lithium initiatives and the need for Korean expertise or technology transfer, Grau cited South Korean car battery manufacturer SK On’s signing of a memorandum of supply with the Chilean firm SQM, based in Chile, to obtain lithium, a key mineral for the manufacture of electric vehicle batteries.

“SK On will obtain 57,000 tons of lithium hydroxide, starting next year until 2027,” said Grau.

Under the five-year deal starting in 2023, SQM will provide SK On with a total of 57,000 tons of lithium.

The quantity is sufficient to produce batteries for approximately 1.2 million electric vehicles, according to an SK On press release.

The minister also cited LG Energy Solution's long-term agreement with Chile's SQM to supply lithium and enhance the procurement of raw materials.

“LG Energy Solution is to study and develop joint investment projects in different stages of the value chain of the electromobility industry,” said Grau.

SQM will provide LG Energy Solution with 100,000 metric tons of lithium over seven years, commencing in 2023 and concluding in 2029.

The volume of supply can support the production of batteries for approximately 2 million EVs, according to the LG Energy Solution press release.

Meanwhile, Grau said that the 20 years of free trade agreements with Korea -- the first signed with an Asian country in 2004 -- were historic. The agreement contributed to making Korea Chile’s fifth commercial partner, with a trade exchange of $7.9 million in 2022. In the same year, exports to Korea reached $6 million and imports $1.9 million, Grau added.

Korea and Chile established diplomatic relations in 1962. In 2002, Chile became Korea's first FTA partner and was among the four FTA candidates suggested by the International Monetary Fund.

The two countries are part of multilateral organizations such as the World Trade Organization, Asia-Pacific Economic Cooperation and the Organization for Economic Cooperation and Development.

“Following the discussions held during the meeting between Prime Minister Han Duck-soo and President Gabriel Boric in October 2022, we want our relationship with Korea to be highly strategic,” said Grau.

Nicolas Grau has been Chile’s minister of economy, development and tourism since March 11, 2022. Before assuming this role, he was a professor of economics at the Universidad de Chile and an adjunct researcher at the Centro de Conflicto y Cohesion Social until February 2022. In the past, he served as the president of the university's Student Federation in 2006 and is an active member of the Convergencia Social Party. He holds a Ph.D. in economics from the University of Pennsylvania.