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Following recent reports regarding SQM’s arbitration proceedings with Chile’s CORFO, SQM came out with more of its own side of the story this week. SQM published a release regarding the “Main Points of the Arbitration Proceeding Between SQM and CORFO,” reasserting that has fulfilled all obligations relating to its lease agreement and has no outstanding debt with the government agency.
By Francesco Mocellin (own work), via Wikimedia Commons.
Following recent reports regarding Sociedad Quimica y Minera de Chile’s (NYSE:SQM) arbitration proceedings with Chile’s Corfo, SQM came out with more of its own side of the story this week.
SQM published a release regarding the “Main Points of the Arbitration Proceeding Between SQM and Corfo,” reasserting that it has fulfilled all obligations related to its lease agreement and has no outstanding debt with the government agency. The company acknowledged that keeping a reasonable level of confidentiality is advised during arbitration proceedings, but argued that since Corfo’s arguments have been put out to the public, it needs to have its own say.
“In light of the extensive press coverage in recent days of CORFO’s position regarding the arbitration process, SQM considers it necessary to make public its position on the main points under discussion subject to the ongoing arbitration proceeding,” the company said in a statement.
Some of the main points covered relate to SQM’s lease payments, formulas used to determine reference prices for minerals sold and water rights for its operations in the Atacama. For example, SQM’s lease payments are based on a percentage of lithium product sales, but Corfo claims that SQM has been using the wrong formula to determine those payments, and that Corfo has suffered economic losses as a result.
Corfo has also suggested that SQM did not provide sufficient documentation regarding logistics and other costs that are discounted from reference prices used to calculate lease payments. SQM has argued that it had external auditors check its information when Corfo questioned those numbers in the past, and that everything turned out to be correct.
Regarding Corfo’s claim that SQM hasn’t done its duty to upkeep markers delineating property lines at its leases, the company stated, “this is clearly an artificial conflict that does not reflect the facts.” It stated that the responsibility to keep up property line markers is still Corfo’s, and that the duty was never transferred to SQM.
Corfo reiterated its accusations against the company once again on Thursday. According to a report from Online Financial Journal published on Diario Financiero (in Spanish), Corfo’s Eduardo Bitran stated that the organization has plenty of evidence to support its arguments that SQM systematically sold potassium and lithium carbonate production at below-market prices, and argued that SQM has seriously breached its contracts.
Corfo also stressed the importance of contracts being fulfilled in good faith.
And SQM was quick to respond. “SQM reiterates that it has always acted in good faith in the operation of the Lease Agreement and has always acted in accordance with such Lease Agreement,” it said in a press release put out Thursday. “The Company has cooperated and will continue to cooperate with CORFO in relation to the Lease Agreement in force.”
Certainly, the situation is an interesting one to follow. Lithium investors will continue to watch for more updates on the arbitration proceedings.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
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