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SQM (NYSE: SQM), the world’s second largest lithium producer, has inked an earn-in agreement with battery anode and advanced materials company Talga Group (ASX: TLG) to jointly advance the Aero lithium project in northern Sweden.
The Chilean lithium miner can earn up to a 70% interest in Aero by funding up to $19 million in exploration spending over a seven-year period.
Talga will retain all rights and obligations over graphite minerals at Aero and will receive a management fee for each stage of the earn-in deal. The company will also be awarded a “success fee” if a decision to mine is made.
Mark Thompson, managing director of Talga, believes that collaborating with SQM gives its company an opportunity to build a European lithium supply centre.
“As one of the few potentially large-scale lithium hard rock opportunities in Europe, Aero might be significant to the region’s battery and electric vehicle industry,” Thompson said in the statement.
Once the earn-in period is completed, both parties are required to contribute to further expenditures in proportion to their ownership stakes or face dilution.
SQM International Lithium division CEO, Mark Fones, said the deal with Talga is part of the company’s efforts to build a global and competitive lithium asset portfolio.
“Expanding into new and promising jurisdictions, such as Sweden, has been a strategic goal for us, and partnering with Talga, who has demonstrated expertise in the region, further enhances this achievement,” Fones said.
SQM began expanding beyond Chile about three years ago, first targeting Australia. In July, it reached an earn-in deal with Tambourah Metals (ASX: TMB) covering the explorer’s Julimar North project in Western Australia. Three months later, the company agreed to buy a 30% interest in Australia’s Pirra Lithium and has the option of boosting its stake to 40%.
SQM tried, but failed to take over Azure Minerals (ASX: AZS) on its own. It ended up partnering with Australia’s richest person, Gina Rinehart, through her company Hancock Prospecting.
The deal gave the Chilean lithium producer a stake in Azure’s Andover project and a partnership with Hancock, which has rail infrastructure and local experience in developing mines.
SQM also holds a 50/50 interest with Wesfarmers in the Mt. Holland lithium mine, which kicked off operations in March. The Western Australia-based operation is expected to eventually produced enough lithium hydroxide to power close to one million new electric vehicles every year for half a century.
SQM has also expanded lithium carbonate capacity at home. It expects to produce 210,000 tonnes this year and 240,000 tonnes by 2025. By then, it said it should be totalling 305,000 tonnes of lithium carbonate equivalent.
The company recently signed an agreement with copper giant Codelco, which gives the state-run miner a majority share in the new partnership while extending SQM’s lease in the Atacama salt flats through 2060.
