SQM opposes agreement for share sale to competitor Tianqi

By Martim Facada
Published: Monday, 22 October 2018

SQM is citing risk to free competition in its opposition to China's Tianqi Lithium acquiring a 24% stake in the Chilean miner currently held by Canada's Nutrien.

Chilean lithium miner Sociedad Quimica y Minera (SQM) has stated its opposition to the agreement reached between national anti-trust regulator Fiscalía Nacional Económica (FNE) and China’s Tianqi Lithium that will allow the East Asian company to acquire a 24% stake in SQM currently held by Canada’s Nutrien.

The agreement does not mitigate all the risks to free competition needed for such transactions, and would leave the Chilean company exposed, a spokesman for SQM told Fastmarkets IM on September 14.

"The company does not believe that the measures proposed in the agreement effectively resolve the risks that it intends to mitigate, and does not correctly prevent access to sensitive information, which could [result in] damage [to] SQM and the market," SQM said.

"Having a competitor that is also an important shareholder, SQM could be subject to investigations and penalties for reasons that are outside its control," it added.

SQM said that its board of directors had judged that the proposed measures were inadequate, adding that the acquisition should be denied because having a direct competitor as a shareholder would present risks and challenges to free competition.

The agreement between FNE and Tianqi will now be subject to approval or rejection by the South American country’s anti-trust court, the Tribunal de la Libre Competencia (TDLC). No time frame was given for this decision to be reached.

In June this year, Tianqi agreed to pay Nutrien a cash sum of $65 per share for its stake in SQM, for a total value of about $4.07 billion. This sale was a condition imposed by regulators in China and India for the creation of Nutrien through the merger of PotashCorp and Agrium on January 1, 2018.

Since that time, the proposed transfer of SQM shares has raised concerns among other Chilean entities such as the National Development Agency (Corfo).

Tianqi is currently the largest lithium producer in China.