The revelation in early September of email communications
between Sociedad de Quimica y Minera SA (SQM) and Chilean
socialist party senator Fulvio Rossi has caused major
embarrassment to the politician and returned the lithium,
iodine and nitrates miner to the spotlight.
According to reports published by Chilean newspaper, El
Mostrador, an email was sent by the Partido Socialista
(PS) senator in August 2012 to former SQM CEO, Patricio
Contesse Gonzalez, requesting financial support for 32
The total sum requested was Chilean peso (Ch$) 20m
($29,000*). This was later cut to Ch$17m ($25,000), when the
list of candidates was reduced to 19 by Rossi.
Pressure on the company and the politician intensified when
another local news source, La Tercera, exposed a
further email message in which Rossi explicitly asked to issue
receipts for false "communications advice" to justify the
A source in the Chilean mining sector told
IM that "it is not uncommon in Chile for
companies to make donations to political parties – in
fact, it almost has to be done because there is no other source
of money". But, they added, "there are limits about how much
money you are allowed to give and SQM broke the rules".
However, another source told IM that both
Senator Rossi’s request and SQM’s
donations were within the confines of the law, adding that
press outrage over the matter stems from the fact that the
senator had previously denied making any contributions to SQM
and that such donations would have not been supported by the
left wing PS.
SQM declined to comment in-depth on the matter. A company
spokesperson simply told IM that "there is an
ongoing investigation on legal political contributions". The
spokesperson added that the company does not see any additional
impact arising from the matter on either SQM or its ongoing
arbitration process with state agency CORFO over mining leases
at its Salar de Atacama lithium brine site.
Leaked emails show that SQM has
involved in unauthorised funding of political
parties in Chile. (Source: Kay
The senator’s colleagues, meanwhile, have been
more outspoken. Describing the matter as "extremely
distressing", PS president, Isabelle Allende, said that the
actions of Rossi represented "individual behaviour, which does
not in any way correspond to policy, let alone party
leadership". Carlos Montes, another socialist party senator has
insisted on the need to better regulate the relationship
between money and politics. "Now the challenge is to move to
another stage," he said.
Rossi has since had to suspend his party membership. He is
currently on medical leave, recovering from surgery for throat
cancer. A number of the 32 candidates listed by Rossi in his
funding request have said that they intend to take legal action
against the senator.
Former SQM chief Contesse had his employment terminated by
the company’s board in March this year after 25
years as CEO, amid investigations into whether money from SQM
and other companies was channelled illicitly to electoral
campaigns for the right wing Independent Democratic Union
(UDI). He was replaced by then-deputy CEO, Patricio de
Unscathed by earthquake
While SQM has failed to avoid being plunged into yet another
political scandal, the company did at least escape its
operations being materially affected by an earthquake,
measuring 8.4 on the Richter scale, which hit Chile on 16
The tremor struck near the city of Illapel, located in the
central part of the country, 280km north of Santiago in the
Coquimbo region, killing at least 13 people.
SQM, which produces lithium, potash, iodine and nitrates at
a handful of locations at some distance to the north of the
epicentre, said that the earthquake "did not damage our
production facilities, which continue to operate normally". The
statement from the company further outlined that there were no
accidents or injuries involving SQM’s workers that
live in the areas affected by the earthquake.
Locally operating US lithium producer, Albemarle Corp., also
said it was unaffected.
Mining scaled back at Pedro de Valdivia
Towards the end of what proved to be an eventful September
for SQM, the company announced that it is to partially close
mining operations at its Pedro de Valdivia facility, which
produces iodine and nitrates and is located in north Chile, as
part of cost-cutting measures.
The facility is mostly focused on nitrates, producing around
500,000 tpa and approximately 2,800 tpa iodine. Under the plan,
the company will partially continue to produce iodine at the
facility but will stop all other operations.
SQM also produces iodine at its Nueva Victoria plant, near
Iquique, in north Chile. CEO Solminihac, said: "Undoubtedly the
mining operation of Pedro de Valdivia has been a very important
part of SQM’s development."
"The advances in the processes and technology developed by
the company in recent years allow us to replace the nitrates
production at Pedro de Valdivia with nitrates production from
the Nueva Victoria facility. The decision to close the mining
operation and part of the production plants of Pedro de
Valdivia is inevitable, given the current production
capabilities of the company."
According to the company, in the next few months it expects
iodine production at its Nueva Victoria facilities to reach
more than 9,000 tpa.
SQM also said its production costs continue to decrease. In
the first seven months of 2015, production costs were 13.5%
lower than the production costs for the same period in 2014,
the company said.
SQM added that it expects to continue expanding its market
share over the next few years.
*Conversions made September 2015.