The extraction will take place in the Atacama Desert in northern Chile, where approximately 40 percent of the world's total lithium reserves are located.
The agreement on the new company, named Nova Andino Litio, is described by state-owned Codelco as "one of the most important milestones in Chile's corporate history."
SQM is 22 percent owned by Chinese lithium producer Tianqi.
The new company hopes to increase lithium production in the Atacama Desert by about 300,000 tons per year. In 2022, 243,000 tons of the so-called white gold were mined in Chile.
