Tianqi Lithium Corp, China’s biggest lithium producer, was reported to have reached an agreement with Chile’s anti-trust regulator FNE that removes a hurdle for the Chinese miner to purchase a 24% stake in the world’s top lithium producer SQM.
The stake purchase deal presented a series of measures to limit Tianqi’s influence on SQM, including having limited access to the latter’s commercially sensitive information and waiving voting rights for board members.
“This extrajudicial agreement … marks a milestone, because for the first time measures are established in relation to the acquisition of minority interests by a company with respect to a competitor,” said Chile’s National Economic Prosecutor Mario Ybar through a FNE statement.
Tianqi said in a later statement that it has agreed to comply with the conditions as a clear signal of its respect for Chile and its institutions, which marks a critical further step in the process of finalizing the investment deal.
Tianqi said it expects the transaction will advance smoothly as scheduled and be closed in the fourth quarter of this year.
Tianqi’s interest in SQM comes as Chinese firms have rushed to secure supplies of lithium, a major component for rechargeable batteries in various industries, especially electric vehicles, which the Chinese government has been putting intensified efforts to promote in order to combat air pollution and help domestic carmakers lead the emerging EV industry. Acquiring SQM’s stake is expected to give Tianqi greater access to lithium resources and strengthen China’s presence in the supply chain of EV batteries.
Tianqi announced earlier in May that it would buy a quarter of SQM’s stake for $4.1 billion, but the deal has been delayed pending an investigation by the Chilean regulator in response to a complaint filed by Corfo, the nation’s institution for economic development.
Chile’s previous administration led by former President Michelle Bachelet had requested FNE to scrutinize the acquisition, alleging the deal would distort the global lithium market.
The FNE, though saying the investigation had determined that Tianqi’s purchase of SQM “could generate anti-competitive effects”, said the Chinese miner had promised to take a series of measures to mitigate those effects, which enabled the two parties to reach an agreement that “sufficiently preserves free competition in the lithium industry.”
The deal, before it can be finally closed, would still have to be approved by Chile’s Anti-Trust Court, which is slated to hear the details of the transaction on Sept. 13 and will release a final decision on Oct. 4.