FILE PHOTO: Brine pools from a lithium mine, that belongs U.S.-based Albemarle Corp, is seen on the Atacama salt flat in the Atacama desert, Chile, August 16, 2018. REUTERS/Ivan Alvarado/File Photo

SANTIAGO (Reuters) - Chile will delay a previously announced arbitration with Albemarle Corp ALB.N, the world's top lithium producer, in anticipation that the U.S.-based miner will make a new offer to bring it into compliance with a 2016 contract, a source close to the negotiations told Reuters.

Under the contract, U.S.-based Albemarle had agreed to provide as much as 25 percent of its annual production at a discount to companies seeking to produce battery metals within Chile.

But state development agency Corfo, which leases mining rights to Albemarle in the lithium-rich Salar de Atacama, had in October threatened to refer the dispute to the Paris-based International Chamber of Commerce, saying the miner had failed to make a “serious” offer to the companies, thus violating the terms of its contract.

The source with knowledge of the negotiations told Reuters attorneys for Albemarle and Corfo had continued conversations recently and that Corfo anticipated Albemarle would soon make a more favorable offer.

Albemarle did not immediately respond to requests for comment.

Albemarle had previously said it regretted the disagreement, but decried what it considered the “substantial difference” between the contractual agreement and what Corfo is now demanding.

The contract clause that requires Albemarle to provide the ultralight battery metal at a reduced price is intended to help spur a value-added lithium industry.

In March, Corfo awarded contracts to Chile’s Molymet, China’s Sichuan Fulin Industrial Group and a joint venture between Samsung SDI Co Ltd and South Korea’s POSCO to produce battery components in Chile using discounted lithium from the Atacama, for a total investment of $754 million.

All of the projects are awaiting resolution of the contract dispute with Albemarle, Corfo has said.