Codelco sticks to SQM lithium deadline as deal opposition mounts

State-owned Codelco is on track to finalize a landmark deal with lithium supplier SQM well before the next Chilean government takes office, despite mounting political opposition heading into elections.

Codelco is sticking with its deadline of completing all pending approvals by the end of September, a company official said Monday. Those approvals include a final nod from Chilean nuclear agency CCHEN, community consultation and Chinese antitrust approval. China’s Tianqi Lithium Corp. is a key shareholder in SQM.

Under the deal, SQM would relinquish a majority stake in its prized Atacama assets to Codelco in exchange for three more decades of operations. It’s part of President Gabriel Boric’s efforts to boost state involvement in the critical mineral while stepping up production despite current global oversupply. Criticism has ranged from the deal being a case of state overreach to terms being overly beneficial to SQM.

Presidential candidate Jeannette Jara, who won a left-wing primary on Sunday, has vowed to respect the Codelco-SQM tie-up if it’s finalized during the current administration, but would seek alternatives if the deal is still pending. Other candidates have criticized the lack of a public bidding process. On Monday, lower house members overwhelmingly supported a commission’s opposition to the deal, albeit in a largely symbolic measure.

Chileans head to the polls in November, with a run-off vote slated for December. The new president will take office in March.

Tianqi continues to fight the tie-up in court, saying it lacks transparency and should go to a shareholder vote. SQM’s top shareholder is the family of Julio Ponce, the former son-in-law of dictator Augusto Pinochet, who ruled Chile in the 1970s and 80s.

SQM and Codelco are betting on low costs to keep expanding despite prices of the battery metal languishing around four-year lows.

(By James Attwood)