SANTIAGO Chilean state miner Codelco, the world's largest copper producer, said on Friday it had created two subsidiaries to run a newly mandated lithium business amid a government plan to increase state control over the industry.

The government instructed Codelco in April to begin talks with companies running lithium mining operations in Chile's Atacama salt flats as part of a new lithium strategy that will see the state take majority stakes in all "strategic" projects.

As well as talks with the world's two largest lithium miners, Albemarle and SQM, Codelco has also been tasked by President Gabriel Boric's government with developing new alliances.

In a statement Codelco said a new subsidiary, Salares de Chile SpA, would operate its lithium activities while another, Minera Tarar SpA, would focus on the Atacama salt flats and possible partnerships with private firms operating there.

Maximo Pachecho, the current chair of Codelco's board of directors, was named chairman of both companies, with Eduardo Bitran, who had led negotiations over contracts with Albemarle and SQM some years earlier, as vice-president.

Economy Minister Nicolas Grau said in an interview with Reuters that the government expects to close negotiations with the existing Atacama miners before March 2026, when the current government's term comes to an end.

On Thursday, SQM said it expected to begin talks with Codelco in the coming weeks.

(Reporting by Fabian Andres Cambero; Writing by Sarah Morland; Editing by Jan Harvey)