Chile shunned two of the world's biggest lithium producers when awarding extraction contracts worth a total of $121 million to a local firm and a Chinese company, the minerals ministry said Wednesday.

China's BYD Chile SpA and Chile's Servicios y Operaciones Mineras del Norte S.A. were awarded the right to extract 80,000 tons of lithium each, although the ministry did not say where.

American firm Albemarle, which produces 19 percent of the world's lithium, and Chile's SQM, which extracts 17 percent, were both unsuccessful in their tenders.

Chile is the world's second largest producer of lithium after Australia, with 32 percent of the global market, according to the mining ministry.

The particularly low density metal is primarily used in lithium ion batteries for electric cars and mobile devices.

"The entry of both companies will increase the dynamism of the local lithium industry so that Chile can regain its position on the world stage," said the mining ministry.

It said Chile was the world's largest producer of the metal until 2016.

The ministry said the quotas awarded amount to 1.8 percent of Chile's "known lithium reserves."

Market and consumer data company Statista estimates that Chile is home to 57 percent of the world's lithium reserves.

The International Energy Agency expects demand for lithium to increase 42 percent by 2040.

BYD bid $61 million for its lot, while Servicios y Operaciones Mineras del Norte bid $60 million.

The two companies have seven years to carry out studies and develop their projects, and then another 20 years to extract the metal.

The tender sparked controversy in Chile as it took place just three months before the end of conservative President Sebastian Pinera's mandate.

Leftist president-elect Gabriel Boric's team had asked the government to postpone the tenders and set up a "roundtable" to discuss various conditions to apply to the contracts.

Mining Minister Juan Carlos Jobet said the government would work with the successful companies to ensure that "a portion of the payments they must make be used to support local communities and to invest in research and development."

Chile had offered five lots to tender but considered offers for the other three to be too low.

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