SQM updates shareholders over delayed Codelco lithium deal

Chile’s SQM on Thursday told shareholders it pushed back a deadline for a lithium deal with state-run copper producer Codelco due to the “complexity of the negotiation,” including ongoing audits.

SQM and Codelco hammered out a preliminary agreement in December in line with a government mandate to boost state control over the lithium industry in Chile, the world’s second-largest producer of the metal that is essential for electric vehicle batteries.

The companies were set to announce final terms by March 31, but on Wednesday extended that deadline to the end of May.

On Thursday, SQM summarized what management discussed with shareholders in a meeting held that day at the request of China’s Tianqi Lithium Corp., a major shareholder.

“Both the Company and Codelco are conducting an audit or due diligence process of the assets, businesses and contracts that each will contribute to the joint venture,” SQM said in a statement, underscoring that plans were still under discussion and have not been finalized.

Among expected terms, which will allow SQM to continue to operate in the Atacama salt flat from 2031 to 2060, SQM reiterated it plans to transfer to Codelco its mining concessions in Maricunga, a salt flat that has yet to yield commercial lithium production.

It also flagged the purchase and sale of SQM’s mining properties in Maricunga as a condition for the partnership to take effect, along with consultation of local indigenous communities over certain aspects of lithium contracts.

As well, SQM plans to equally share the six board of director seats with Codelco through 2030, while maintaining the power to break ties on board votes. A seventh seat will go to Codelco in the second phase of the partnership set to start in 2031.

SQM also told shareholders it plans to make public all information related to the economic value of the partnership with Codelco prior to signing contracts.

(By Daina Beth Solomon and Alexander Villegas; Editing by Rosalba O’Brien and David Gregorio)