Tianqi to Buy Stake in SQM


In a deal that would strengthen ties between two of the worlds largest lithium suppliers, Nutrien Ltd. agreed last week to sell a 24-percent stake in Chiles SQM to Tianqi Lithium Corp.

The transaction could ratchet worries in the lubricant industry since lithium is used to thicken three quarters of the worlds greases. Lithium hydroxide prices have already risen sharply due to skyrocketing demand from manufacturers of batteries used in electric and hybrid vehicles, and concerns have been raised about China trying to wrap up supplies for its nascent EV industry.

On the other hand, there are arguments that partnerships are helping lithium producers to to ramp up global production of the soft, white metal. The worlds largest single source of lithium is an Australian joint venture between Tianqi and Albemarle Corp.

Nutrien is a Canadian fertilizer company formed earlier this year by a merger between Agrium and Potash Corp. As a condition of that union, regulators required the company to divest its 32 percent stake in SQM, which is also a major fertilizer supplier.

Tianqi agreed to pay $4.1 billion for 62.6 million shares of SQM, formally known as Sociedad Qumica y Minera de Chile S.A. In its May 17 press release about the transaction, Nutrien said it will sell its remaining 20.2 million shares of SQM in due course.

Lithium and lithium complex soaps are by far the most common types of thickeners used by the global grease industry, but prices for lithium hydroxide have jumped the past few years due to sharply higher competing demand for batteries.

SQM and Tianqi are the worlds third- and fourth-largest lithium suppliers, with market shares of 14 percent and 12 percent, respectively, according to Bloomberg. Albemarle is the top supplier with an 18 percent share, followed by China-based Jiangxi Ganfeng Lithium Co. with 17 percent.

Reuters reported last week that Chiles anti-trust watchdog will scrutinize Nutriens proposed sale to Tianqi because it would give the Chinese company close to a controlling share of SQM.

Global lithium production has more than doubled since 2012 and is forecast to more than double again within the next four years, topping 550,000 metric tons by 2021.

Greenbushes Lithium Operations, the worlds largest single source of the chemical, is operated in southwestern Australia by Talison Lithium, a 51-49 joint venture between Tianqi and Albemarle. Last year the partners announced a $320 million expansion that will more than double its capacity.

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