Rio Tinto (ASX, LON:RIO) is said to be weighing an investment in Chile’s Chemical and Mining Society (SQM), the world’s largest lithium producer, becoming the latest in a long line of companies interested in grabbing a stake in the Santiago-based miner.
According to Chilean news site El Mostrador (in Spanish), the Anglo-Australian giant is eying the 32% interest in SQM that Canada’s Potash Corp. of Saskatchewan (TSX, NYSE:POT), the world’s largest producer of the fertilizer by capacity, has to sale to be allowed to merge with smaller rival Agrium (TSX, NYSE:AGU).
The Saskatoon-based potash miner is working with Goldman Sachs and BofA Merrill Lynch to sell its stake in SQM(worth about $4.5 billion at current market values), and so fulfill some of the conditions imposed by regulators in China and India to approve the company’s friendly merger with Agrium.
El Mostrador suggested Tinto Rio had already made a bid, potentially trumping Chinese companies Sinochem, Tianqi and GSR Capital, all of which had also expressed interest in SQM.
The news came on the heels of PotashCorp and Agrium announcing Tuesday that China’s ministry of commerce had approved the merger, but required the sale of PotashCorp’s minority holdings in Arab Potash Company and SQM within 18 months of closing, and Israel Chemicals Ltd. within nine months.
SQM, which has a market value at just over $15 billion, produced roughly 44 million tonnes of lithium carbonate last year and is developing new projects in Chile and Australia.
Rio’s current incursion in the lithium market is mostly limited to its 100%-owned lithium and borates mineral project in Jadar, Serbia, which is still in the early stages of development.
While the company’s chief executive Jean-Sebastien Jacques has not ruled out acquisitions in recent comments to the market, he has also noted the company would only consider opportunities that make a “smart buy”.
Sources familiar with PotashCorp’s stake sale said in September that US chemical company Albenarle Corporation (NYSE:ALB) had already expressed its interest in acquiring a piece of SQM.
Source: Mining.com
