PotashCorp plans to sell a big stake in Chile’s SQM, a key supplier of the metal
When Canadian fertiliser company PotashCorp acquired shares in Chile’s SQM almost 20 years ago, the latter’s lithium business appeared an afterthought.
Controlled by Julio Ponce, the well-connected son-in-law of Chile’s former dictator, Augusto Pinochet, SQM was known as a fertiliser company. However, the then obscure lithium business is why the 32 per cent stake is now valued at $4.7bn.
Lithium has hitched a stunning ride on the wave of interest in electric cars, making it one of the world’s hottest commodities. SQM’s lithium business generates about 60 per cent of the profits for the company, which is in talks with Elon Musk’s Tesla over a deal to supply lithium, a key ingredient in electric car batteries.
It is against this backdrop that Potash is being forced by regulators to sell the stake as a condition of its merger with rival Canadian fertiliser producer Agrium. While only a handful of companies are likely to compete for the stake, the eventual price will be an important measure of how seriously the hype around electric cars is being taken.
“It’s a good barometer of where lithium is today,” Simon Moores, founder of London-based consultancy Benchmark Mineral Intelligence, says.
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