Upgrading in the lithium value chain: Chile’s policies

Since the early 2010s, various governments have pursued strategies to promote lithium production in Chile, each with distinct objectives.Footnote ⁶² While the right-wing administration of Sebastián Piñera (2010–2014) focused primarily on boosting local production and exports through renegotiating exploitation contracts to increase extraction quotas, the center-left government led by Michelle Bachelet (2014–2018) questioned Chile’s role in the global value chain. During Bachelet’s tenure, there was a growing consensus among experts and the center-left coalition about the necessity not only to increase production for global markets but also to incentivize higher value-added activities. Bachelet convened a panel of experts to develop policies addressing lithium production and governance of the salt flats where it is extracted.

The new policy pursued three interconnected objectives. First, expanding the local production of lithium while addressing regulatory issues that had been lingering for years like higher monetary contributions from lithium companies to the state. Second, promoting the development of higher value-added lithium products. This included the founding of new research centers focused on lithium technological applications, establishing new production contracts to promote greater investment in R&D by private companies, incentivizing foreign direct investment in higher value-added segments of the industry such as cathode manufacturing, and even using a public company—in this case, the copper giant CODELCO—to increase production and innovation capacities. Third, the policy also involved generating mitigation measures to protect the environment and communities living near the salt flats where the mineral is extracted.

While this agenda stalled during the second presidency of Sebastián Piñera (2018–2022), it regained strength during the presidency of Gabriel Boric (2022-). In 2023, Boric announced a new National Lithium Policy that followed the footsteps of the previous Bachelet proposals. Among other, it proposed the creation of the National Lithium Company to start production and innovation processes in new production sites, announced the renegotiation of exploitation contracts with existing companies to increase public revenues from private lithium production, and announced new research and development centers dedicated to research on technological applications for lithium using additional revenues from lithium extraction.Footnote ⁶³

The main argument of this article is that these policies have largely failed in terms of the upgrading of the Chilean lithium industry because of business institutional power. Due to this, we argue that the new policies also run the risk of suffering similar challenges. We analyze this in detail in the next section.

Delegation: The state’s pact with private power

Delegation refers to a path of institutional business power in which the state assigns or shares the implementation of industrial activities—such as production, investment, or technological development—with private actors, rather than concentrating these functions within the public sector (Busemeyer and Thelen, Reference Busemeyer and Thelen2020). In the context of lithium, this approach is particularly relevant to understanding how Chile has structured its industry. The Chilean state opted to delegate key roles to private companies while retaining regulatory authority and, in some cases, strategic oversight. However, although the state retained regulatory and oversight authority on paper, our analysis reveals that through delegation, the state lost key information and technical capacity to the private sector that became then a crucial hindrance for a more active role during Bachelet’s government.

A brief historical recount is necessary to understand how delegation was shaped. Long before its use for electromobility was known, lithium was considered a strategic element to produce thermonuclear bombs. Due to this, the military dictatorship of Augusto Pinochet (1973–1990) declared lithium a strategic resource with special protection from the state. Decree No. 2,886 of 1979, gave lithium a legal status distinct from that of other minerals, placed it under the auspices of the Chilean Commission for Nuclear Energy and established that no concessions of state lithium belongings could be given to private parties–as was the case with all other minerals.Footnote ⁶⁴ This was later ratified in the Organic Law on Mining Concessions of 1982 and the Mining Code of 1983.

Now, the latter legislation excluded mining titles established before 1979, many of which belonged to specific public companies. The state promotion agency, CORFO, and other public companies such as the copper giant CODELCO owned significant parts of the salt flats where lithium is produced, a situation that prevails until now.Footnote ⁶⁵ Because these belongings existed before the new legislation enacted by Pinochet, it became possible to exploit them. Since then, there have been three ways of exploiting mining properties in Chilean legislation: directly through the state or its companies, through administrative concessions, or through special operations contracts between the state and a private entityFootnote ⁶⁶ . Given the neoliberal gist of economic policy during the dictatorship, officials used the last two to grant lithium exploitation rights to private companies.

During the 1980s, two joint-venture companies were created to exploit lithium with CORFO as an important shareholder providing the legal rights necessary to conduct the mining operations (see Table 2). The first was the Chilean Lithium Society (SCL) formed in 1980 between CORFO and Foote Mineral, a US-based company. The contract signed between CORFO and SCL gave the latter exclusivity to operate in Atacama for a period of 8 years.Footnote ⁶⁷ Later, in 1983 CORFO signed an agreement with two other companies: US-based Amax Exploration Inc., and Molymet, of Chilean capital, forming Minsal (Sociedad Minera Salar de Atacama). This was responsible for managing the operations in the salt flats. These were the predecessors of the two companies that dominate the sector today, Sociedad Química y Minera de Chile (SQM) and Albemarle.

1. a. How strong was delegation: State’s dependency on continued private provision

Table 2: Formation of SQM and Albemarle from the 1980s privatization process

Source: Authors’ elaboration based on Lagos (Reference Lagos2012).

After the process of delegation of lithium extraction activities, state dependency on the two private companies for both production and innovation intensified. We identify three interrelated dimensions of this dependency. First and foremost, the concentration of information and technical knowledge about production and innovation processes within these private companies. Second, the resulting inability of the state to replace these firms, that is, terminate existing contracts to displace these powerful actors if needed. Third, the appropriation of key assets—most notably, water rights essential for lithium production—which means that, even in the event of a replacement, incoming firms would find it virtually impossible to operate without the cooperation of the incumbents. This leads us to conclude that delegation had crucial consequences for the development of the lithium industry in the country.

First, the very process of leasing the operation of lithium extraction to private companies reinforced the state’s reliance on private technical knowledge and expertise. Since the state agency CORFO ceased to have ownership in the mining companies but owned the mining underlying properties, specific contracts were implemented to regulate the exploitation of lithium under the new structure. For instance, a leasing contract for CORFO’s mining properties was established with SQM, which would last until 2030. This agreement stipulated that SQM would pay a rent for the occupation of the salt flat that would be determined based on a percentage of the sales derived from extracting the minerals. The contract included other obligations such as the upkeep of the mining properties to ensure their good condition. A similar agreement was reached with Albemarle.

Now, these exploitation contracts did not stipulate conditions other than these basic ones. Notably, they did not include nor leave space for conditions that have been identified in the literature as key for industry upgrading.Footnote ⁶⁸ Over time, SQM and Albemarle developed a high level of technical expertise and specialized knowledge of the industry that has not been transferred to the state. One interviewee highlighted the lack of strategic vision of the state for not including additional conditionalities–even under democratic governments:

One explanation for this was the little strategic character of lithium in those years–particularly after the military uses were discarded. Another interviewee makes this case clearer:

Still, this had important consequences when the state realized it wanted to take a more active role in the industry. Since lithium production from brines is a relatively simple process, one could think that in order to promote higher value added in the industry, the state could have resorted to technical capacity and practices from before the privatization of the industry, or the state could have resorted to its accumulated experience in other mining operations, for example, through the state-owned copper giant CODELCO.

Regarding the first point, a closer examination indicates that until the mid-1990s, when lithium production was already in private hands, it was not a prominent part of the companies’ production plans. SQM, for example, only began producing lithium carbonate in 1997, and by 2000, revenue from the sale of lithium and iodine combined accounted for only about 26% of its operations, and most extraction related to nitrates and sodiumFootnote ⁶⁹ . This suggests that there was little relevant experience with lithium extraction prior to privatization that the state could draw upon.

In terms of the second point, one important component of Bachelet’s policy (2014–2018) to upgrade lithium production processes was indeed the use of CODELCO to enter the industry and start investing in higher value-added segments. Now, although it is true that Chile has never targeted the copper industry for the type of value chain upgrading discussed here, even if this were the case, it would have been difficult to transfer this knowledge from the copper industry to the lithium industry, which highlights the importance of private monopolization of information and technical knowledge of the industry. On this point, it is important to note the differences in the technical operation of lithium production from brines, as found in Chile, and traditional mining industries. Interviews revealed that private lithium producers hold the technical knowledge regarding lithium mining from brines, while public actors such as CODELCO and other regulatory agencies have experience with traditional mining and, therefore, lack expertise in this form of production. Furthermore, engineering and geology programs in the country mainly concentrate on traditional mining practices, with only a few now starting to include lithium mining in their curricula. The Ministry of Mining’s management of this resource reinforced the lack of skills necessary to understand the lithium sector, as noted by a high-ranking government official.

In other words, ever since the privatization of lithium companies, the state has remained unaware of the realities of lithium exploitation and innovation and it cannot draw upon experience previous to the privatization process and/or existing experience on other mining processes, heavily depending on the expertise accumulated within private lithium producers.

State dependency manifested not only in a general dependency on the private sector for production and innovation, but specifically, dependency on the two companies favored by the privatization of lithium production. With few players able to develop this activity in the country, replacing these companies came to be seen as a risk to the country’s global competitiveness. One case in place was the attempt by Sebastián Piñera (2010–2014) to increase production quotas. In 2012, a bidding process was opened to assign new exploitation quotas in the Atacama Salar. The result was a highly publicized political scandal: the bid favored SQM and as it was found, the company had bribed the undersecretary of mining to establish a clause in the bid that only this company could fulfill. Now, even in this context, public officials recognized the difficulty of terminating the SQM contract and adjudicating it to another company. In relation to the possibility of taking SQM to a trial and opening a new bidding process, one interviewee commented:

Eventually, state officials recognized that taking SQM off the map would have simply left Chile off the race in the world’s lithium market and therefore, the best scenario was actually to renegotiate contracts with the company instead of putting an end to them.Footnote ⁷⁰

The final point in the delegation processes of lithium is the dependency associated with the control by producing companies of key resources, in this case, water. Although the extraction of lithium from brine is a relatively simple process, it requires large amounts of waterFootnote ⁷¹ , a resource that is scarce in the Chilean salt flats located in the driest desert on earth. To promote new economic sectors, during the Pinochet dictatorship water rights were given for free and at perpetuity to those requesting them for economic activity.Footnote ⁷² In the case of lithium production, the two private companies acquired the water rights needed for their production processes but are not obliged to sell them if they lose the operations contracts with the state. This asymmetry not only entrenches the position of incumbent firms but also reveals the state’s limited institutional and legal capacity to reclaim or reassign critical productive assets in strategic sectors. This further complicated the possibility of replacing incumbent actors in the industry. One journalistic investigation argued that this amounted to a true “check dam” to protect the business, effectively blocking any attempt by the state to renegotiate contracts.Footnote ⁷³ In this sense, the concentration of control over essential inputs like water reflects a structural weakness in the Chilean state’s capacity to regulate, coordinate, and plan within the lithium sector. Without effective tools to reassert authority over key resources, the state remains dependent on private actors not only for production but also for the basic means required to pursue its own industrial and environmental goals.

1. b. The consequences of delegation: Erosion of regulatory and administrative capacity

The above analysis revealed that delegation had crucial impacts on the information available to the state bureaucracy and its knowledge about productive and innovation processes in the lithium industry. We contend that this severely reduced the state’s regulatory and administrative capacity.

Lack of information directly affected the ability of the state to regulate the sector (regulatory capacity), even considering the relatively light regulatory pressure existing in Chile.Footnote ⁷⁴ In fact, lithium companies have often provided only partial information to CORFO and other state agencies about their operations, which resulted in the industry monopolizing data that public companies and other state institutions did not have access to, an “information asymmetry” that according to one interviewee affected the state’s capacity to regulate the industry:

A direct consequence of this lack of information was in fact, the inability of the state to enforce existing regulations, particularly those related to the contractual obligations for companies to disclose information on exploitation quotas and sales to calculate rental payments. The lease contracts stipulated that the rent amount payable by the lithium companies to CORFO would be determined by companies themselves based on sale prices. However, for years, CORFO failed to monitor these calculations.Footnote ⁷⁵ In May 2013, CORFO conducted an internal audit that exposed SQM’s failure to pay some US$5 million (US$ of 2013) in rents over the course of just one year (between 2012 and 2013).Footnote ⁷⁶ This eventually led to a protracted legal process between the state and SQM to recover the lost revenues. Albeit the state did win several concessions during this process (e.g. a payback, increased rental payments and other financial contributions -including an amount for R&D purposes-), it ended up consolidating the power of the firm in the sector; notably, the state tripled the existing extraction quota for SQM, which exponentially increased its sales and profits during the ensuing lithium price boom, strengthening the country’s existing place in the value chain.

From the point of view of the companies, it is clear that even this light regulation was below optimal, and that they would want to operate more freely to increase extraction instead of complying with state-led value-chain upgrading initiatives. As one interviewee explained:

Another consequence of the lack of information regards data on lithium exports. Years ago, Weil et al. discovered significant differences in the figures reportedFootnote ⁷⁷ by different bodies such as customs, port authorities, and the Nuclear Energy Commission regarding the values of lithium production and salesFootnote ⁷⁸ . One interviewee recalls that this even carried the potential of a diplomatic impasse as it was found that SQM was selling lithium for nuclear purposes to a country prohibited by the United Nations (Interview 1, National Lithium Commission). Despite efforts at strengthening oversight capacity, the interviewee suggested that private companies possess all the relevant information about the sector, and that this directly affects the state’s capacity to regulate them, let alone execute public policies.

There is evidence that this weakened regulatory capacity -in this case, regulatory enforcement- directly affected some of the value chain upgrading policies of the Bachelt government. During this period, lease contracts included a novel clause: lithium-extracting companies would be allowed to increase exploitation quotas if they offered lithium at preferential prices for companies producing higher value-added products in Chile. One such contract was signed with Albemarle in 2016 and a bid was established to attract companies interested in producing higher value-added products. Notable bidders included Korea’s Posco and Samsung, as well as China’s Suchuam Fulin.

However, after a lengthy negotiation to implement the new regulation, Albemarle decided not to follow the spirit of the contract and twist its interpretation not to be forced to sell lithium at below market price. The company contended that the contract obliged it to “offer” lithium at below price, not actually sell it, which resulted in the fallout of the government’s intentions. Although the government took the company to an arbitration process in 2021 that after three years of negotiations resulted in a compensation payment in its favor, the underlying clause did not materialize and Albemarle won the possibility to continue augmenting its extraction quota.Footnote ⁷⁹

In 2022, the Boric administration advanced a new round of contract renegotiations with similar intentions, this time with SQM. In early 2023 the government announced with great fanfare that two of the world leaders in battery production, BYD and Tsingshan, signed contracts with CORFO to receive lithium carbonate produced by SQM at below-market prices in exchange for the installation of battery component production plants in the Antofagasta region. While the plants were supposed to be ready by May 2025, in late April 2025, the construction phase had still not begun. In an interview, the CEO of BYD Americas, Stella Li, suggested that, among other things, the company was withholding the investments since the fall in the international prices of lithium made the deal no longer attractive to the company.Footnote ⁸⁰ Later, in early May, both companies officially desisted from the announced investments.Footnote ⁸¹ After this, one executive from the sector declared that “there are no conditions for the industrialization of lithium in Chile”.Footnote ⁸²

This case exemplifies a significant erosion of the Chilean state’s regulatory capacity in the governance of lithium extraction. The inability to enforce contractual provisions—such as ensuring that companies comply with agreed pricing mechanisms—demonstrates not only weak legal enforceability but also the limited authority of the state to discipline private actors operating in strategic sectors, as modern industrial policy would require. The reinterpretation of contractual clauses by Albemarle, and the state’s ensuing—but still unresolved—recourse to international arbitration, reveals a structural asymmetry in state–business relations. Furthermore, the lack of reliable information on production and exports, which enabled SQM to withhold substantial rent payments, underscores the fragility of regulatory oversight mechanisms. In both cases, the state’s diminished capacity to monitor, enforce, and sanction private actors compromises its ability to steer strategic sectors in line with national development objectives. In fact, while new investment contracts have been announced, after a lengthy process market actors are skeptical about the chances of Chile to catch up in the context of a rapidly evolving global market for battery production as well as declining agreement across the internal political spectrum to continue the policy beyond the Boric government.Footnote ⁸³ In their eyes, Chile appears to be taking one step forward and two steps back in its effort to move up the value chain.Footnote ⁸⁴

The second consequence of delegation on state capacity relates to the knowledge about the production and innovation processes in the industry, which affects the state’s capacity to implement its policies, a key dimension of administrative capacity. The erosion of the latter can be most clearly seen in the case of CODELCO and the idea to use the company to strengthen lithium production and innovation processes. The strategy of using SOEs—even in extractive sectors—to enter new economic sectors and promote them is not new. For example, the Korean iron and steel company Posco, an eminent example of the developmental state, has successfully entered the lithium market, including the production of raw materials for cathodes (lithium carbonate and hydroxide). Posco has invested not only in lithium, but on other battery materials such as nickel and graphite, as well as in stage four of the value chain, that is, the recycling of battery materialFootnote ⁸⁵ . In the case of Chile, despite the view that CODELCO should play a central role in the production and industrialization of lithium, its actions have been largely marginal. We argue that this stems directly from how delegation reduced technical expertise within the state bureaucracy.

According to Evans, in the 1970s when the Chilean state nationalized the copper industry and created CODELCO, “the Copper Department’s twenty years of experience in monitoring copper TNCs was the foundation for taking over production”.Footnote ⁸⁶ In the case of lithium, it was exactly the contrary; thirty years of monopolization of information and technical expertise by private companies has had a direct influence in CODELCO’s incapacity to enter the market, like Posco did in Korea.

Despite its intentions to participate in the lithium market for years, CODELCO has not yet made significant progress in the exploitation of the mineral, less so entering higher value-added segments. In 2012, CODELCO first announced its intention to enter the lithium market by exploiting the Maricunga Salt Flat, of which it was the owner. That same year, Gerardo Jofré, CODELCO’s CEO, recognized that it would have to start lithium exploitation in partnership with another private company, the Japanese Mitsui, which had been a strategic partner of CODELCO in other projects. However, initial attempts to collaborate were not fruitful and were left unfinished. A new CODELCO CEO did not prioritize lithium due to the internal productivity issues and labor conflicts within the state-owned company. By 2017, when the lithium policy was announced by Bachelet, no actual operations had been established. Bachelet renewed the intentions of using CODELCO to exploit lithium, this time through a Special Contract for Lithium Operation emitted by CORFO. This gave CODELCO legal authorization to exploit the Maricunga and Pedernales salt flats. But even though some of the largest lithium operations take place in Chile, such was the disconnection between the company and the lithium extraction operations that the then CEO Nelson Pizarro had to travel to China to learn about lithium extraction.

During the Boric administration (2024–2026), the state pleaded to create a new public company altogether, the National Lithium Company. However, it was soon revealed that this would not start direct operations but would do it only in a joint-venture with private capital. In the end, Boric decided to use CODELCO to create such joint ventures. This required significant communications efforts to explain why the public company should partner with private ones–most eminently, companies that were involved in bribery and other scandals in previous years. As the then CEO of CORFO, José Miguel Benavente, explained, “The state knows, but in a very general way… some geomorphological characteristics but not the real business (sic). That is why it took so long to come up with a strategy”Footnote ⁸⁷ . More eloquently, Minister of Finance Mario Marcel said that “the state does not have experience in this industry in spite of being a proprietor” and that by joining with private capital the idea was to “get the knowledge to understand [how the industry works] from the inside”.Footnote ⁸⁸ Ironically, the Chilean state is now expecting to join forces with the very companies that have a history of regulatory and contract breaches directly affecting its capacity to promote the upgrading of the lithium industry in the country. In other words, the lack of technical expertise within the state—which resulted from the process of delegation above described—reduced the capacity to implement the new policy of using SOEs to enter the lithium market (state’s administrative capacity), limiting therefore one of the main ways through which the state intended to push the industry toward higher value-added segments.

In turn, we briefly analyze the presence, strength and consequences of the other two mechanisms of business institutional power, privatization and accretion. Our empirical finding is that only privatization was present while accretion was not. Still, this was not particularly strong–that is, the state had resources to counter it–and therefore its effects on state capacity were limited.

In spite of privatization, the state retains capacity

In terms of institutional power, privatization refers to “the state’s retreat—partial or wholesale— from the provision of some public function, which it cedes to private actors, often in the supposed interest of greater efficiency”.Footnote ⁸⁹ During the late 1980s and early 1990s, the state agency CORFO sold all its shares in lithium public companies, including the newly formed ones for lithium exploitation. This left lithium exploitation formally under the control of two private companies, albeit the underlying mineral assets remained per law in state’s hands. SCL was completely privatized in 1989 when CORFO sold its stake to Rockwood Lithium. In 2012, the company was acquired by US-based mining giant Albemarle. Similarly, Minsal was privatized in 1995 when CORFO’s and Amax’s shares were sold to SQM, a former public chemical company that had itself been privatized in the early 1980s. This means that even though property of the minerals remained in the hands of the original proprietors, notably CORFO in the case of the Atacama salt flat–the primary site of lithium production in Chile–, the production operation and the resulting technological innovation processes were entirely left to the two private companies controlling production and commercialization. As of now, SQM and Albemarle are the companies that continue to monopolize the exploitation of lithium in Chile. In 2022, they represented a combined 36% of world lithium production, 20% and 16% respectively.Footnote ⁹⁰ Hence, although the state initially declared lithium a strategic resource not subject to the type of privatization that occurred in other mineral industries, dictatorship and democratic governments’ officials devised a process of privatization in which property remained in the hands of state agencies, but two large private companies were allowed to extract and commercialize the mineral without intervention from the state nor the agencies holding the underlying mineral belongings. According to Busemeyer and Thelen, the strength of this mechanism depends on the credibility of exit threats, that is, how costly it would be for the state to resume its activities in the sector if private companies were to shed their investments.

Even though the industry’s concentration in only two companies increases on paper the effects of eventual exit threats, only one of them, Albemarle, could pose a credible exit threat due to its foreign ownership. Albemarle operates mostly in other countries, such as China, Germany, and AustraliaFootnote ⁹¹ , whereas SQM’s profits come almost exclusively from its operations in Chile. SQM started internationalizing in the mid-1990s, but only in terms of bond issuing and commercial operations; only since 2017 the company began a strategy of diversifying production to other countries but as for 2023, SQM still concentrated 80% of its production operations in Chile’s Atacama salt flat.Footnote ⁹² In addition to this, there is evidence that before the late 2010s, lithium did not figure prominently as a concern for policymakers, unlike copper production and its industry conditions. One interviewee from CODELCO confirmed this:

In other words, although the state retreated completely from the lithium sector, an exit threat on the part of private companies was credible only in the case of Albemarle, which reduced the scope of this type of institutional power.

The reduced effect of privatization on state capacity can be seen, following the framework of the institutional business power discussion, in the impact on fiscal costs, that is, the costs the state would have to incur to replace private companies if they were to execute their exit threats. In the case of lithium, fiscal costs of a re-deployment of public ownership in the sector were not particularly high. This is due to the possibility—part of the policies of the Bachelet and Boric governments—of using the copper giant CODELCO to step into lithium production operations. Despite the stark Chilean privatization processes, a few key companies remained in the hands of the state chief among them CODELCO. CODELCO is the largest copper-producing company in Chile and the world, representing 29% and 7% of total production, respectively.Footnote ⁹³ It employs more than 60 thousand people (between direct and indirect employment) and in 2022 alone it counted with a surplus of US$2.7 billion.Footnote ⁹⁴ This economic capacity was an important reason why the dictatorship finally decided to leave it in state’s hands. Therefore, in the case of lithium, the challenge of financial capacity does not represent a major constraint for the Chilean state; rather, it was the lack of information and knowledge about the operation of lithium—a consequence of delegation—which represented the main obstacle as analyzed above.

Accretion: The public does not favor private companies over public ones

The third mechanism through which institutional business power can be exercised is accretion, which refers to the gradual expansion of private companies’ influence and their eventual control over lithium production. According to Busemeyer and Thelen, this has the potential of creating a normative backlash against state alternatives, which we have translated as affecting the state’s political capacity—specifically, the state’s diminished ability to legitimize public sector involvement.

In the Chilean case, private firms currently account for 100% of production in the sector. However, as evidenced above, this outcome was made possible precisely through state-sponsored delegation and privatization, not because firms themselves expanded into a new sector, as would be the case if accretion was present. In theoretical terms, this dynamic would be expected to trigger a normative backlash, that is, public support for continued private control in the industry remains stronger than support for public participation. In line with the lack of accretion in Chile, we don’t see this type of normative backlash. In fact, certain cultural elements help to understand why public companies in general—and production of minerals in particular—are still preferred over private production among the Chilean public, even after several rounds of across the board deregulation, privatization and liberalization processes.

Figure 5 shows results of the Latinobarómetro opinion poll, a representative poll for several available years. It asks respondents to show their degree of agreement with the following statement: “The privatization of public companies has been beneficial for the country”. As the data shows, the disagreement (disagree or strongly disagree) is pervasive and growing over the years. In the three years available that coincide with the initiation of discussions about lithium policy in Chile (2010, 2011, 2013), an average of 71% disagrees with the statement.

Figure 5. Public opinion on the results of the privatization of public companies.

Source: Latinobarómetro survey, several years. Available at: https://www.latinobarometro.org/

In fact, with respect to the management of natural resources there is a strong cultural attachment to state involvement. The nationalization of the copper industry during the 1960s and 1970s involved a high degree of nationalistic sentiment. Even the full nationalization achieved during the high times of political conflict in the Allende government, was approved unanimously in Parliament. This consensus not only prevented the privatization of CODELCO during the dictatorship, but more generally, explains the nationalism with which the management of natural resources is seen. One example illustrating this is the following. In 2020, during the process for writing a new constitution for the country, an opinion poll found that the “re-nationalization” of natural resources ranked fourth among the populations’ priorities, behind access to health, education and pensions, and above issues like gender equality, the right to work, or the protection of children and adolescentsFootnote ⁹⁵ . We interpret this as suggesting that the Chilean public was not particularly inclined to defend the primacy of private lithium production over a public alternative.

In sum, our analysis suggests that the effects of institutional business power on state capacity have been significant, and that this has affected the ability of the state to carry the said policies intended to upgrade the industry. The key to this has been the loss of the capacity to generate, process and use information about the status of the lithium industry which has weakened the state’s regulatory –that is, oversight and enforcement–and administrative–that is, policy implementation–capacities. This erosion of capacity was the outcome of an institutional configuration in which key knowledge and operational capabilities became concentrated in private hands, leaving public agencies unable to fulfill core state functions required for industry upgrading in the lithium sector.