Chile's SQM hires ex-chairman Ponce as adviser, government says

SANTIAGO, June 5 (Reuters) – Chilean lithium miner SQM has retained former chairman Julio Ponce as an adviser, according to Chilean state development agency Corfo, despite an agreement to distance himself from the firm to end a long-running royalties dispute.

Ponce and his brother Eugenio, a former president of the world's biggest exporter of lithium carbonate, were employed as strategic advisers in a unanimous vote by the board and will have offices on the same floor as the firm's top management, local daily La Tercera reported.

Corfo, which oversees Chile's lithium leases, earlier this year inked a deal with SQM that increased the miner's quota of lithium in the Salar de Atacama but stipulated that Ponce, long a divisive and controversial figure in Chile, remove himself and his family from decision-making at the firm.

Ponce, a former son-in-law of late Chilean dictator Augusto Pinochet, has held power at SQM since it was privatized under Pinochet in the 1980s. In 2014, he was fined for market manipulation.

Corfo said that hiring Ponce did not violate the terms of the deal.

"The decision taken by the board of SQM to incorporate Ponce Lerou as an adviser … does not modify the agreement," the agency said in a statement.

However, Eduardo Bitran, who was the Corfo chief when it struck the deal with SQM, said Ponce's return violated the spirit of the agreement.

"This makes a mockery of all of those who were involved in the process but also it suggests they are laughing at Chileans," he told Chile's Radio Cooperativa.

SQM did not immediately reply to a request for comment.

The January deal with the Chilean state set the stage for Chinese lithium producer Tianqi's purchase of a near one-quarter stake in SQM, gaining it coveted access to a key ingredient in rechargeable batteries that power mobile phones and electric cars.

(Reporting by Antonio de la Jara; Writing by Aislinn Laing, Editing by Rosalba O'Brien)