Chile antitrust watchdog probing Tianqi buy of lithium miner stake
Chile antitrust watchdog probing Tianqi buy of lithium miner stakeBrine pools and processing areas of SQMâs lithium mine on the Atacama salt flat, the world's second biggest. (Image courtesy of Nutrien.)
Chileâs antitrust regulator FNE has launched a probe into Tianqiâs recent acquisition of a stake in Chemical and Mining Society (SQM), the world's second largest lithium producer, to determine the possible effects on the market.
Chinese miner Tianqi Lithium, the Asian nationâs largest producer of the white metal, purchase last month a 24% stake in Chileâs SQM from Canadaâs Nutrien (TSX:NTR), further expanding Beijingâs increasing hold over the market for the key component needed in the making of batteries that power electric vehicles.
âIn our investigation, the FNE will seek to verify, or dismiss, whether anti-competitive risks in Chile â¦ are plausible, and of a magnitude that makes them relevant,â the regulator said in the statement (in Spanish).
Regulatorâs decision comes three months after Chile's development agency Corfo filed a complaint to block a potential fusion between the two lithium miners, alleging it would distort the global market.
The sale process, which ended earlier than anticipated, was plagued with controversy. In March, Chile's development agency Corfo filed a complaint to block Tianqi from acquiring the stake in SQM, arguing that such move would give China an unfair advantage in the global race to secure resources to develop electric vehicles.
According to Corfo, which oversees SQMâs lithium leases in the Salar de Atacama, Tianqi and the Chilean producer combined will control 70% of the global lithium market, as both firms have announced plans to substancially hike production capacity through 2020.
Beijing criticized the move, saying any efforts to block the deal could harm bilateral relations. The Chinese Ambassador Xu Buâs remarks were followed by comments from China's trade and economic representative to Chile, Liu Rutao, who said he suspected other countries, racing to secure lithium supplies, had lobbied to block Chinese firms from the deal.
Despite the challenges, Tianqi bough t nearly a quarter of SQM for $4.1 billion. If approved by regulators, the acquisition would leave the Chinese miner just shy of a controlling stake in SQM and likely entitle it to appoint three seats on the board.
If the FNE decides the deal presents antitrust risks, it can take the case before ChileÂ´s TDLC antitrust court, or reach a settlement with the parties, which would also need the courtâs approval. If no such risks exist, the case would be closed, it added.
The regulatorâs timing of the decision could be critical, as Chinese and Indian regulators gave Nutrien 18 months from Nov. 2, 2017, to offload its stake in SQM, as a condition to clear the merger between Potash Corp and Agrium, which created the company.
Lithium carbonate prices have been drifting lower from highs in December but remain around the $20,000 level a tonne from $6,450 per tonne at the beginning of 2015.
Unlike cobalt, another crucial battery ingredient, the so-called âwh ite petroleumâ is abundant and existing brine producers in South America have the capacity to quickly increase output. Combined with many hard-rock projects coming on stream in Australia, last yearâs roughly 220kt of production could more than triple within less than a decade.Source: Google News Chile | Netizen 24 Chile