Sinochem, China’s state chemical group, is among bidders for a $4bn stake in Chile’s SQM, one of the world’s largest producers of lithium, a key component in the batteries of electric cars.
The stake put up for sale by Canada’s PotashCorp has also attracted interest from China’s GSR Capital, a private equity firm, Ningbo Shanshan, a battery materials company, and China’s largest lithium producer, Tianqi Lithium, according to people familiar with the process.
The sale comes as Chinese companies are attempting to secure supplies of battery materials to meet the government’s ambitious plans to expand production of electric vehicles.
China is the world’s largest electric car market and is set to dominate global production of lithium-ion batteries. In August, GSR bought Nissan’s electric vehicle battery business.
Last month, Chinese carmaker Great Wall Motor signed an agreement with Pilbara Minerals, the Australian lithium miner, to secure supplies for the next five years. And last year, China Molybdenum bought the Tenke copper and cobalt mine in the Democratic Republic of Congo for $2.65bn.
Potash is selling its stake in Sociedad Química y Minera de Chile, or SQM, to meet regulatory conditions governing the Canadian company’s merger with Agrium, the Calgary-based fertiliser group. Goldman Sachs and Bank of America Merrill Lynch are overseeing the sale, said people familiar with the process.
SQM declined to comment. GSR, Ningbo Shanshan, Tianqi and Sinochem also did not respond to requests for comment. SQM is locked in a dispute with Chilean development agency Corfo that has hampered its ability to expand production to meet rising demand for lithium. Last week the company said talks between the two sides had ended in a stalemate.
Corfo objects to the ownership of the company by Julio Ponce, the son-in-law of former Chilean dictator Augusto Pinochet. Ponce owns a majority of SQM through an agreement with shareholder Kowa Group of Japan.
Next month’s upcoming election in Chile could remove that deadlock, as the head of Corfo, Eduardo Bitran, is likely to be replaced if Conservative candidate Sebastián Piñera wins, according to Ben Isaacson, an analyst at Scotiabank.
However, this could also strengthen Mr Ponce’s control over the company, which in turn could justify a discount in the value of the stake in SQM, Mr Isaacson added.
Shares in SQM, listed on the New York Stock Exchange, have risen by 107 per cent this year to trade at $59.2 on the back of rising demand for lithium from the electric car industry.
Source: www.ft.com
