Chinese firm to buy stake in Chilean lithium mine for $4-B

An aerial view of the brine pools and processing plant of the SQM lithium mine on the Atacama salt flat, in the Atacama Desert of northern Chile, January 10, 2013. Credit: REUTERS / Ivan Alvarado

SANTIAGO — The growing demand and production for electric vehicles by auto companies worldwide is fueling a scramble for the ingredient, which is held mainly by Argentina, Australia, Chile and China.

Tianqi, which is already building a major lithium processor in Western Australia, will buy 62.5 million SQM A shares for $65 each from Canada-based Nutrien, according to a report from Reuters.

The fact Tianqi is not buying Nutrien’s full 32 percent SQM stake was likely due to a compromise between Nutrien and the Chilean government to remove any possibility for Tianqi to one day control SQM, BMO Capital Markets analyst Joel Jackson wrote in a note.

Chile’s former government in March had tried to block the deal for the valuable resource as SQM is the second-largest lithium producer in the world after U.S.-based Albemarle Corp.

Nutrien Chief Executive Chuck Magro said at a BMO investor conference in New York that he was confident the deal would not trigger antitrust concerns and would be completed by the fourth quarter.

Corfo, the Chilean agency that filed the complaint to block SQM shares to Chinese companies, has not responded to request for comment. The FNE regulator responsible for ruling on the complaint declined to comment.

Reuters reported earlier this week that Tianqi and SQM were in talks for a deal. Tianqi had been circling SQM since 2016.

Earlier on Thursday, Australia’s Kidman Resources Ltd. said it would supply lithium for Tesla Inc.’s electric car batteries.

The stake sale is necessary for Nutrien to meet regulatory commitments after it was formed in January by the merger of Agrium and Potash Corp. of Saskatchewan.

SQM, whose U.S.-listed shares fell 1.6 percent at $57.21, also has a significant fertilizer business. Nutrien shares eased 0.2 percent in Toronto to C$66.05.

Nutrien has said it plans to use proceeds from the sale of stakes in SQM and two other companies in part to expand its network of farm retail stores in the United States, and to establish a network in Brazil. Nutrien plans to sell its remaining 20.2 million B shares of SQM in the future.

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