SANTIAGO – Chile's SQM, one of the world's largest lithium producers, said on Monday that it agreed to sell its 50% stake in the Cauchari-Olaroz project in Argentina to China's Ganfeng Lithium for $87.5-million.
The deal also stipulates that Ganfeng will pay SQM an additional $50-million if the project's goals for selling lithium are met, SQM said in a statement.
The transaction is expected to be completed in the fourth quarter, SQM added.
Canada's Lithium Americas Corp (LAC) said in a separate statement that its stake in Cauchari-Olaroz would rise to 62.5% from 50% now as a result of the deal. Ganfeng, which will own 37.5% of the project, also agreed to give LAC a $100-million loan, allowing it to pay for its part in initial capital expenditures.
The shake-up in ownership in the project in northern Argentina comes as China has been aggressively promoting electric vehicles, whose batteries use lithium, to help domestic carmakers build global brands and to reduce air pollution.
Earlier this year, China's Tianqi Lithium said it was buying a 24% stake in SQM for $4.1-billion. The sale has not yet been approved by Chile's antitrust regulator.
The Cauchari-Olaroz project is expected to start production in 2020.