Tianqi Lithium buys 25% stake in world’s largest lithium producer

By May 21, 2018

Tianqi Lithium, the Chinese leading global supplier of lithium products, is acquiring a 25% stake in Chile’s lithium firm, Sociedad Química y Minera de Chile (SQM). The amount totals $4.07 billion and, according to reports, Tianqi Lithium will buy 62,556,568 ‘A shares’ of SQM for $65 per share in cash, which had been earlier held by Canadian fertilizer company Nutrien.

“The announced sale of the majority of our SQM holdings marks another key integration milestone for Nutrien. With growing free cash flow, combined with the significant proceeds from this sale, Nutrien further enhances our balance sheet and liquidity, and places us in a strong position to execute on our capital allocation priorities,” said Chuck Magro, Nutrien’s President and CEO in Nutrien’s press release.

Nutrien will be giving up all of its ‘A shares’ in SQM. The sale is a consequence of the regulatory requirement of the Competition Commission of India and Ministry of Commerce in China, in order to approve the merger of Agrium and PotashCorp, which made Nutrien. While its ‘A shares will be sold, Nutrien will still retain its 20,166,319 SQM ‘B shares’, which will be sold later, when other customary closing conditions that the agreement is subject to, such as approvals from and Tianqi Lithium shareholders and regulatory approvals, are completed by the fourth quarter of this year.

Vivian Wu, President of Tianqi Lithium, said, “This is an attractive investment for Tianqi Lithium which fits well within our existing business strategy. Tianqi Lithium’s shareholders will greatly benefit from this transaction given SQM’s long-term stable financial returns and steady dividends”.

Chile and Lithium: Startups sitting on a gold mine but unable to dig into its riches

Canada-based Nutrien is a leading provider of crop inputs and services, based in Saskatoon, Saskatchewan. The fertilizer company helps growers increase food production in a sustainable manner. Nutrien produces and distribute over 26 million tonnes of potash, nitrogen and phosphate products world-wide, making it the largest producer of potash and the second largest producer of nitrogen fertilizer in the world. With a market capitalization of $34 billion, it came into being through the merger of PotashCorp and Agrium, in January, 2018.

Tianqi Lithium is a global supplier of lithium products, mainly dealing in lithium resource development, exploration, and downstream lithium refining. The company produces a range of high-quality lithium products, including lithium hydroxide, lithium carbonate, lithium chloride, lithium metal and mineral concentrates. Tianqi Lithium has an established presence in China and Australia, allowing the company to service customers across Europe, Asia, and Oceania.

SQM is a Chilean chemical company, which supplies plant nutrients, iodine, lithium, and industrial chemicals. It claims to be the world’s biggest lithium producer. With its natural resources and main production facilities located in the Atacama Desert between Chile’s I and II regions, SQM was founded in 1968. It operates through its five business lines, specialty vegetable nutrition, iodine and derivatives, lithium and derivatives, industrial chemicals, and potassium.

SQM currently shows an annual lithium carbonate production capacity of 48,000 tonnes in Chile, which is expected to increase to 70,000 tonnes by mid-2018 and to 100,000 tonnes in 2019, according to Daniel Jimenez, senior commercial vice president at SQM, as quoted by Reuters. The firm also demonstrates 6,000 tonnes of yearly capacity for lithium hydroxide, which is utilized in high-nickel content batteries, which is expected to reach beyond double to 13,500 tonnes by June this year.

In agreement with Chilean development agency Corfo in January, SQM is set to increase production upto 216,000 tonnes of lithium carbonate annually till 2025, subject to investments and relevant permits. However, the company is yet to decide whether to exceed 100,000 tonnes.

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