FT: Sinochem Eyes PotashCorp’s $4-billion SQM Stake

PotashCorp's stake in SQM has reportedly also attracted interest from China’s GSR Capital, Ningbo Shanshan and Tianqi Lithium Industries.

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PotashCorp’s (TSX:POT,NYSE:POT) 32-percent stake in lithium producer Sociedad Quimica y Minera de Chile (NYSE:SQM) is up for sale, and according to the Financial Times, Sinochem International (SHA:600500) is one of the bidders.

PotashCorp is in the process of gaining regulatory clearance from antitrust regulators for its merger with Agrium (TSX:AGU,NYSE:AGU). In September, PotashCorp said China’s Ministry of Commerce and the Competition Commission of India are conditioning their approval of the merger on the divestment of PotashCorp’s offshore minority ownership interests.

One of those is PotashCorp’s stake SQM, which has reportedly also attracted interest from China’s GSR Capital, battery firm Ningbo Shanshan (SHA:600884) and Tianqi Lithium Industries (SZSE:002466). 

Chinese firms are becoming increasingly interested in securing battery materials to meet demand for electric vehicles (EVs). Government subsidies and investment have made China the world’s largest maker of EVs. In fact, the China Association of Automobile Manufacturers recently said 507,000 EVs were sold last year, accounting for about 45 percent of the global total. Beijing has set a manufacturing target of producing 7 million cars and hybrid vehicles by 2025.

SQM is currently in a legal dispute with Corfo, Chile’s state-run development agency with a decision on the arbitration expected by the end of 2017.

Since announcing that it would condition its approval of the merger between PotashCorp and Agrium on the divestment of PotashCorp’s offshore minority ownership interests, the Competition Commission of India has approved the merger and said it will issue a clearance order. Its approval is still conditional on PotashCorp’s divestment of its stake in SQM and and several other companies; however, it has said the companies will be allowed to complete the merger before the divestments occur.

The merger between PotashCorp and Agrium has received unconditional approval from Canada, Brazil and Russia, but has yet to receive approval from antitrust regulators in the US and China. Earlier this year, the firms announced that the company resulting from the merger will be called Nutrien.

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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.

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