Chinese miner Tianqi closes $4 billion lithium deal in Chile

SANTIAGO – China’s Tianqi Lithium Corp. has finally completed its purchase of a 23.77% share in Chilean lithium miner SQM from Nutrien, the Chilean stock exchange said on Monday, for a total sale price of US$4.066 billion.

Tianqi will acquire a 23.77% stake in Chilean mining group Sociedad Quimica y Minera de Chile (SQM) from Canadian fertilizer company Nutrien Ltd, the company stated in a filing to the Shenzhen Stock Exchange as reported by Reuters.

“A minority stake in SQM is great from our perspective, especially when we look at long term growth and expectations for the lithium industry,” said Ashley Ozols, Business Development Manager for Tianqi, after the deal closed.

Tianqi struck a deal earlier this year to buy the stake from Nutrien, the company formed by the merger of Agrium and Potash Corp. of Saskatchewan. As part of that deal, Nutrien was required to sell the stake.

China’s Tianqi Lithium buys stake in Chile’s SQM for $4.07bn

The Chinese company has had to overcome a series of regulatory obstacles to complete the deal, as Chilean authorities worried about the degree of control Tianqi and SQM would gain over the global market for lithium, a key input for rechargeable batteries used in electric vehicles, as well as energy storage units for renewable energy solutions.

Tianqi finally won over the Chilean government by promising not to appoint directors to SQM’s board or disclose any of the company’s confidential information, ensuring that it would not gain too much influence over the company.

The investment is likely to prove a windfall for Tianqi, as SQM owns some of the world’s largest and purest lithium reserves, and the company could as much as triple production over the next decade.

Tianqi, through Talison Lithium which it controls, is also in a joint venture with SQM’s top competitor, No. 1 lithium producer Albemarle Corp (ALB.N) in Australia, that owns the world’s biggest lithium mine, Greenbushes.

Nutrien has said it plans to use proceeds from selling stakes in SQM and two other companies to expand its network of farm retail stores in the United States and establish one in Brazil.

Australia takes over Chile as world’s top lithium producer

With 52 percent of the world’s reserves, Chile competes neck and neck with Australia for the global markets, with each accounting for close to 40 percent of the world’s production.

Argentina, which increased its lithium production by 58 percent in 2016, has about 15 percent of the market.

Chile expects to nearly double its lithium production by 2021, from 77,000 tons in 2017 to 147,000, as US chemical company Albemarle and SQM expand their operations in the Atacama salt flats.