Chilean regulator to investigate SQM stake sale

Chile’s National Economic Prosecutor's Office (FNE) is investigating the sale of a 24% stake in SQM, the country’s largest lithium producer, to Chinese miner Tianqi.

The deal comes at a time when lithium prices have soared thanks to increased demand from the electric vehicle sector, which requires lithium compounds to produce renewable car batteries.

Metal Bulletin assessed the Chinese domestic spot battery-grade lithium carbonate price (min 99.5% Li2CO3) at 120,000-125,000 yuan ($18,510-19,280) per tonne on Thursday June 14, up over 145% from $7,700 per tonne in June 2015.

Chilean Economic Development Agency Corfo has opposed the stake sale and warns it may disrupt plans to grow the country’s domestic lithium processing and cathode-making industry.

The FNE announced the investigation on Friday June 15 after receiving complaints from Corfo and Senator Alejandro Guillier.

In a complaint filed with the FNE in March, Corfo said the deal would give China an unfair advantage in the global lithium market, and could disrupt local beneficiation plans. Beneficiation refers to the treatment of raw materials.

Corfo has clashed with SQM in the past over the terms of the miner’s leases in the Salar Ataquama. The issue was resolved in January 2018 after SQM agreed to overhaul its board, and increase royalties for the leases.

The sale of SQM by Nutrien was mandated by Chinese and Indian regulators. These concerns do not relate to lithium, but instead to SQM’s potash business, which regulators said gave an oversized market position to Nutrien, which was itself formed by the merger of fertilizer companies Potash Corp and Agrium last year.

“In its investigation, the FNE will seek to verify or rule out whether the risks to free competition in Chile, which could lead to the participation of Tianqi in SQM, are plausible and of a relevant magnitude,” the organisation said.

There is no deadline for this investigation, FNE said, adding that it had “decided to communicate the start of this investigation due to the interest generated after the complainants made their complaints public”.