SQM ousts CEO after 25 years at the helm

By Laura Syrett, James Sean Dickson
Published: Friday, 20 March 2015

Reign of lithium leader ends after quarter of a century; PotashCorp. directors resign over SQM tax scandal.

Chile-based lithium and potash producer Sociedad Quimica y Minera de Chile SA (SQM) has terminated the employment of its now-former CEO of 25 years, Patricio Contesse.

SQM said that Contesse had submitted a letter to the board inviting them to consider his position at an extraordinary meeting held on 16 March.

"After deliberating at length and considering the best interest of the company, the board agreed to terminate Contesse’s employment with SQM," the company said, giving no indication as to why the termination had taken place.

Patricio de Solminihac Tampier was elected unanimously by the board as the new CEO of SQM – a decision that was welcomed as "good news" by brokers BanChile in a note on the move. Tampier’s appointment was "a first step towards confronting market worries linked to the company’s corporate governance," BanChile said.

Newswire Bloomberg suggested that SQM’s board had "clashed" over the investigation of Chilean prosecution authorities into alleged payments to politicians by SQM.

SQM has been close to the centre of a number of scandals in recent years. Former Deputy Mining Minister, Pablo Wagner, who is currently in police custody, was formally indicted in January 2015 for forging public documents related to an SQM bid to increase its lithium production capacity.

Chile’s Servicio de Impuestos Internos (SII) tax office took receipt of volunteered documents relating to the lithium tender investigation on 6 March. SQM said that the Chilean tax code’s rules state the SII can request and review any information it has submitted to ensure tax law compliance.

Shortly after announcing the departure of Contesse, SQM said it would voluntarily comply with a demand by Chile’s internal revenue service to hand over tax information for the last six years. Contesse had tried to block the move but  was rejected by the courts.

However, the news prompted the resignation of three of SQM’s directors, Wayne Brownlee, Alejandro Montero and Jose Maria Eyzaguirre, which hold senior positions at North American fertiliser company PotashCorp., with the company accusing SQM of failing to "authorise a review [of the Chilean Public Prosecutor’s allegations] which meets the standards we expect".

SQM’s shares fell sharply on the New York Stock Exchange following the removal of Contesse, from $22.10/share to $18.65/share on 17 March.

In another scandal, the company’s largest shareholder, Julio Ponce, the billionaire son-in-law of former Chilean dictator Augusto Pinochet, who led the country from 1973-1990, was fined $70m in 2014 for his part in an insider trading scheme which ran from 2009 to 2011.

Ponce’s fine was the largest ever levied against a single person in Chile.

Lithium News Review

Orocobre secures  first customer

Orocobre has bagged its first customer order for supply from its Olaroz Lithium project in Northern Argentina, the company said in its half year accounts statement released in March. 

The company said production is expected to begin in the second quarter of 2015, ramping up to 17,500 tonnes/tpa by the fourth quarter of this year.

Orocobre is investing $28m in the ramp-up phase, using funds raised by a $40m share placement and a $15m share purchase plan. Global car manufacturer Toyota is funding 25% of the Olaroz Lithium project, and Orocobre 75%.

The Olaroz Project is a joint venture (JV) between Orocobre, Toyota and Singapore’s Jujuy Energia y Mineria Sociedad. It is operated through Sales de Jujuy, a subsidiary of the Singaporean business, and the equity interest is Orocobre 66.5%, Toyota 25% and Jujuy Energia y Mineria Sociedad del Estado 8.5%.

Because of delays in completing the last two circuits of the lithium carbonate plant at the end of last year, the group now has a substantial brine inventory available for the processing of 24,000 tonnes lithium carbonate equivalent, the group said.

Outotec to improve Keliber’s lithium carbonate process

Finland-based mining company Keliber Oy has engaged fellow Finnish technology group Outotec to help it improve the production of lithium carbonate from ore taken from the Lantta deposit in its Central Ostrobothnia lithium project area.

Outotec has previously researched the lithium carbonate production process for Keliber at its facility in Pori, Finland, and has proved the process developed by Keliber for producing lithium from spodumene concentrate is technically efficient and valid.

Outotec has now commenced a test programme to further improve the process using a feedstock concentrate produced at GTK laboratories in Finland.

The programme encompasses all the necessary process stages, from calcining to crystallisation of the lithium carbonate product, and is seeking to define the process parameters and the right equipment configuration.

Keliber hopes to produce battery grade material, which will serve as product samples for Keliber’s pre-marketing efforts. Outotec will also provide an input to a pre-feasibility study scheduled for completion in Q3 2015.

Keliber expects the test programme will be completed by the end of Q2 2015.

Rodinia nets $408,000 via asset sales

TSX-V-listed Rodinia Lithium is raising $408,046 through the sale of 1,166 ha (11.66km2) of mining rights to an unnamed Argentinian mining company. 

The mining rights are situated within the group’s Centenario and Ratones properties located in Argentina, according to a company announcement in March.

The proceeds from the sale will go towards strengthening Rodinia’s balance sheet. The company has made a previous move in recent months to bolster its financial position on paper and reduce debt. 

In 2014, the company awarded 15.4m shares to Aberdeen International in exchange for settling its $998,583 debt pile owed to Aberdeen. The transaction means that Aberdeen now owns 13% of the group’s share capital. 

"The properties in which the company currently has an interest are in the exploration and development stage, as such the company is dependent on external financing to fund its activities," the group explained in its interim financial statement in September 2014.