SQM weighs hard choices in Chile amid $3.7bn share wipeout
The Chilean government’s announcement of a new lithium model is giving the nation’s biggest producer some hard choices, and its shareholders a reason to sell.
SQM, the fertilizer-turned-lithium giant, runs the planet’s biggest and most profitable brine operation in Chile’s northern desert under a contract that expires in 2030.
Under President Gabriel Boric’s new lithium-development policy, SQM has two choices: Keep full control of the operation for the rest of the current contract and risk then losing it when it ends or let the state take a majority stake with the understanding that it could keep operating longer. Complicating the decision further is the fact Chile will have two changes of government before that date, which may bring with it a new lithium policy.
“I would look for SQM to strike an agreement fairly quickly,” said Joe Lowry, an industry consultant.
To be sure, the only other producer in Chile, Albemarle, is facing similar choices. But the US firm has about 20 years left on its contract and is far less reliant than SQM on a single, albeit massive, salt flat in Chile.
With plenty still up in the air, SQM is yet to comment on the government’s plan. For example, it’s unclear how the state would finance its share of existing operations and investments and what role it would play in decision making. It’s also unknown whether SQM would be compensated were it forced to walk away after 2030, BTG Pactual analyst Cesar Perez-Novoa said. His back-of-the-envelope replacement value is about $5-billion.
SQM’s shares were already trading as if the contract wouldn’t be renewed, Perez-Novoa said. But by 1:24 pm on Friday, just as Boric was preparing to give further details on the new model, the stock was down a record 18%, wiping out $3.7-billion in market value.
Article Enquiry
Email Article
Save Article
Feedback
To advertise email advertising@creamermedia.co.za or click here
Research Reports
Projects
Latest Multimedia
Latest News
Showroom
ISO-certified Condra manufactures overhead cranes, portal cranes, cantilever cranes and crane components: hoists, drives, end-carriages, brakes and...
VISIT SHOWROOM
For over 60 years, VEGA has provided industry-leading products for the measurement of level, density, weight and pressure. As the inventor of the...
VISIT SHOWROOM
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation
