Tianqi buys 23.77% stake at SQM for $4bln

By Martim Facada
Published: Thursday, 20 December 2018

Tianqi is maintaining its trend of diversification through the purchase and has plans to reach 58.8 million tonnes per year by 2019, while Nutrien sold its shares at $65 a piece

Chinese lithium producer Tianqi Lithium has purchased 23.77% of A shares in Sociedad Quimica y Minera (SQM), which were previously owned by Canada’s Nutrien. 

A total of 62,556,568 of A shares in SQM were sold for $4.066 billion at a minimum price of $65 per share on the Chilean Stock Exchange on Monday December 3. 

The Tianqi-SQM deal follows a trend in the past two years in the lithium industry where major companies are diversifying their portfolios to include both hard rock and brine operations. The aim of the diversification is to increase output to fulfill demand from the battery industry and spread asset risk.

Most recently Ganfeng Lithium acquired a 37.5% stake in Lithium Americas’ Cauchari-Olaroz brine project in Argentina.   

Meanwhile, SQM reached a joint venture with Kidman Resources in September 2017, acquiring a 50% stake in the Mount Holland project in Western Australia. 

This deal went through after SQM’s opposition to the agreement between Chilean national anti-trust regulator Fiscalía Nacional Económica (FNE) and Tianqi enabling the Asian company to move forward with the purchase in October, due to risk to free competition.

SQM requested the interpretation of FNE-Tianqi agreement by the South American country’s anti-trust court, the Tribunal de la Libre Competencia (TDLC), under the allegation that having a direct competitor as a shareholder and board member presents risks and challenges free competition.

Tianqi is also a majority 51% shareholder in its partnership with the world’s largest lithium producer, Albemarle Corp, in the world’s largest lithium hard rock mining operation, at Greenbushes in Western Australia.

Tianqi is one of China’s largest lithium producers, expected to increase its total production capacity to 58,800 tonnes per year of lithium carbonate equivalent (LCE) by 2019 from 34,800 tpy at present.