Chile politics put Potash in tight spot on SQM stake sale – by Dave Sherwood and Felipe Iturrieta (Reuters U.S. – December 14, 2017)

SANTIAGO (Reuters) – The chance to own a stake in Chile’s SQM, one of the world’s top lithium producers, has attracted several potential suitors as prices for the so-called white gold – a key ingredient in electric car batteries – have skyrocketed.

But the buyer of the 32 percent of SQM being sold by Canadian Potash Corp of Saskatchewan‘s, which needs to divest the stake as part of a merger, will need to navigate tricky politics well before any deal is inked.

With a presidential election in Chile on Sunday, conservative billionaire Sebastian Pinera has emerged as the favorite with investors, but neither he nor his opponent in the second-round runoff, center-left candidate Alejandro Guillier, have expressed a favorable view of the scandal-plagued miner.

Chilean authorities accuse SQM of underpaying royalties, environmental violations and illicit political financing, making the sale more complicated, raising the specter of delays or a steep price discount, according to analysts.

The government has long had a frosty relationship with SQM’s controlling shareholder, Julio Ponce Lerou, the former son-in-law of ex-dictator Augusto Pinochet. SQM denies the allegations and maintains it is confident a high-stakes arbitration with the government over royalties in Chile’s lithium-rich Salar de Atacama region – the source of half of SQM’s revenue – will be resolved in its favor.

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