The sale to Tianqi comes as Chinese companies increasingly scour the globe for the raw materials necessary to ramp up Chinese production of electric vehicles.

Lithium is a key component in the batteries that power everything from cellphones to electric vehicles.

“A minority stake in SQM is great from our perspective, especially when we look at long–term growth and expectations for the lithium industry,” said Ashley Ozols, business development manager for Tianqi, after the deal closed.

Tianqi struck a deal earlier this year to buy the stake from Nutrien, the company formed by the merger of Agrium and PotashCorp. As part of that merger deal, Nutrien was required to sell the stake.

That share came from PotashCorp, which had bought into SQM starting in 2001 with an 18 per cent stake. SQM’s businesses also include specialty fertilizers and iodine.

The Tianqi deal, however, immediately met with scrutiny from regulators, competitors and consumer groups.

Chilean authorities initially expressed concerns that a tie-up between Tianqi and SQM would give the Chinese company a near monopoly over the global lithium market and unprecedented pricing power.

Tianqi, through Talison Lithium which it controls, is also in a joint venture with SQM’s top competitor, No. 1 lithium producer Albemarle Corp. in Australia, that owns the world’s biggest lithium mine, Greenbushes.

A Chilean antitrust court eventually approved the transaction, placing conditions on the sale that limit Tianqi’s access to SQM business secrets and sensitive information.

Ozols said Tianqi would nominate three directors to SQM’s board following the Chilean miner’s shareholder meeting in April.

Several groups, including SQM itself, filed appeals against the antitrust court’s decision to authorize the deal, but each was struck down, allowing it to proceed.

The country’s Constitutional Court in late October also rejected a last-ditch lawsuit by former chairman Julio Ponce Lerou, who controls SQM’s majority shareholder Pampa Group, to overturn the antitrust court’s decision.

“We will reach out to the Pampa Group and others and obviously form a good relationship so we can work together for the benefit of all SQM shareholders,” Tianqi’s Ozols said.

Nutrien has said it plans to use proceeds from selling stakes in SQM and two other companies to expand its network of farm retail stores in the U.S. and establish one in Brazil.

— Reporting for Reuters by Antonio De la Jara; writing by Dave Sherwood.

The post Chinese firm buys stake in miner SQM from Nutrien appeared first on Canadian Cattlemen.

Prices of crop nutrient potash have leveled off this year after hitting eight-year lows late last year due to low crop prices and excessive production capacity.

The slump, which has extended to nitrogen and phosphate fertilizers, has led PotashCorp to seek consolidation and idle capacity.

Potash said the all-stock merger with Agrium, valued at $25 billion when it was announced last year, was on track for completion by the end of the year, forming a new company called Nutrien.

Pressure on Potash stock is likely to be short-lived as investors quickly turn their attention to the merger, combining PotashCorp’s fertilizer capacity with Agrium’s network of stores to sell fertilizer and seed to farmers, said Brian Madden, portfolio manager at Goodreid Investment Counsel, which owns PotashCorp shares.

“The bigger prize is the combination of the two businesses,” Madden said. Nutrien “is going to be bigger, and less volatile.”

The regulatory review and approval process for the Nutrien merger is still underway in the U.S., as well as in China.

India recently approved the merger, contingent on PotashCorp divesting stakes in fertilizer companies ICL Israel Chemicals, SQM and Arab Potash Co. Plc within 18 months of a clearance order from the Competition Commission of India.

PotashCorp should resist using those sale proceeds for further acquisitions in an oversupplied market, Madden said.

PotashCorp’s sales volumes exceeded expectations, but the opening of new mines owned by K+S AG and EuroChem will add competition early next year, said BMO analyst Joel Jackson.

The company’s third-quarter revenue rose 8.6 per cent to $1.23 billion, helped by higher sales volumes and average realized prices of potash.

However, the cost of goods sold rose five per cent in the quarter, resulting in a smaller profit.

Net income fell to $53 million, or six cents per share, from $81 million, or 10 cents per share, a year earlier.

PotashCorp tightened its full-year adjusted earnings to 48 cents to 54 cents per share from 45 cents to 65 cents. Excluding items, profit was nine cents a share, lower than the 12 cents analysts expected, according to Thomson Reuters I/B/E/S.

— Reporting for Reuters by Akshara P in Bangalore and Rod Nickel in Winnipeg. Includes files from AGCanada.com Network staff.

The post PotashCorp Q3 profit disappoints ahead of merger appeared first on Canadian Cattlemen.

Holding company Oro Blanco said in a filing with Chile’s securities regulator that Banco Itau Argentina, which was hired to oversee the sale process, informed it that CITIC had indicated its interest in buying the indirect stake.

Oro Blanco is selling its entire 88 per cent stake in holding in Pampa Calichera, which in turn owns around 20 per cent of SQM, a major producer of lithium and an important supplier of iodine and other chemicals.

SQM’s access to vast nitrate and lithium reserves in northern Chile is expected to attract a number of buyers. Canada’s PotashCorp already owns about 30 per cent in the dual share structure of SQM, while Israel Chemicals has also expressed interest in the Chilean company.

The sale process comes after Julio Ponce, a former son-in-law of late dictator Augusto Pinochet, was forced to resign as SQM chairman earlier this year after two separate scandals.

Such a sale might not be enough to shift control of SQM to a new owner but would be a move in that direction. A refreshed board has said it wants to draw a line under the events and improve corporate governance.

— Reporting for Reuters by Anthony Esposito.

The post Chinese group eyes indirect stake in Chile’s SQM appeared first on Canadian Cattlemen.

Tilk, speaking at a BMO investor conference in New York, said if Saskatoon-based PotashCorp could not build on its SQM and ICL minority stakes, it will consider whether it should keep them.

PotashCorp has control over how Jordan’s Arab Potash Co. markets its potash, and Tilk said the Sinofert stake gives it a window into the Chinese market.

But the company does not have as much influence as it wants over SQM and ICL.

Tilk said in an interview that he has not spoken with Israeli Prime Minister Benjamin Netanyahu about whether he would permit a foreign company to take control of ICL, in which the government holds a golden share.

PotashCorp tried under former CEO Bill Doyle to gain a majority stake in ICL, but ran into strong opposition and backed off in 2013.

Tilk, who took the PotashCorp helm last July, announced a review in December of the company’s four major equity stakes, which at the time were worth US$4.5 billion.

He said on Thursday he did not want to signal any plans for SQM and ICL investments.

“We can’t be counter-productive by doing or acting (to) impair the value of the companies. Timing is everything.”

ICL CEO Stefan Borgas said in an interview that if PotashCorp wants to increase its stake, it should be direct with Israel’s government and ICL’s biggest shareholder, Israel Corp.

“Our advice would always be for anybody who has these kind of interests, not just in ICL, but in general, is be as specific as you possibly can so there is actually a concrete proposal on the table, rather than just discussing concepts,” he said Wednesday.

Borgas said many investors have approached ICL about interest in PotashCorp’s stake.

PotashCorp recently bought a 9.5 per cent stake in Brazilian fertilizer distributor Heringer SA, but Tilk said he does not see the same need for control as in the company’s other equity investments.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors, based in Winnipeg.

The post PotashCorp evaluating SQM, ICL stakes appeared first on Canadian Cattlemen.

SQM vice-chairman Wayne Brownlee, the chief financial officer at PotashCorp, and two directors stepped down late Tuesday after clashing with the rest of the board over whether and how far it should collaborate with a probe by Chilean authorities.

A quarter of the value of the US$6 billion company was wiped out as investors feared what would come next for SQM, which has rights to huge nitrate and lithium reserves in Chile.

The development is the latest twist in a campaign financing saga that has dominated headlines in recent weeks in Chile, traditionally seen as having less corruption than other Latin American countries.

Authorities are investigating whether money from SQM and other companies was siphoned to fund electoral campaigns, principally for the right-wing UDI, a party with links to the 1973-1990 Augusto Pinochet dictatorship.

SQM’s chairman and controller is Julio Ponce, Pinochet’s former son-in-law, who built his stake after the dictator began selling assets in the 1980s.

PotashCorp, the world’s largest fertilizer company by market value, owns an approximate 32 per cent stake in the dual-share structure of SQM, although it has flagged that it may not keep that indefinitely.

“PotashCorp and its SQM board representatives have demanded an exhaustive, transparent and independent investigation,” the Saskatoon-based company said in a statement.

“SQM’s board has not authorized a review which meets the standards we expect.”

PotashCorp spokesman Randy Burton said Wednesday the company has made no decision on whether to sell its SQM stake.

Earlier this week SQM fired its CEO and said it would comply with demands from the government’s internal revenue service to hand over tax information.

But PotashCorp said requests from its representatives that SQM fully co-operate were rejected.

“There’s a debate on the board and with management on what (information) and how much and when they should reveal,” Burton said.

PotashCorp, which heard about the allegations in early January, wanted an independent committee to have free rein to look into them, he said.

He said it was too soon to know if PotashCorp would rejoin SQM’s board under certain conditions but said those seats remain available to Potash. Its stake entitles it to three of the eight voting seats.

— Rosalba O’Brien and Rod Nickel are Reuters correspondents based in Santiago and Winnipeg respectively.

The post SQM stock plummets after directors from PotashCorp resign appeared first on Canadian Cattlemen.

SQM, which has the rights to some of the world’s largest reserves of nitrates and lithium, said after a board meeting on Monday night that it had “agreed to terminate” the contract of CEO Patricio Contesse, who was with the company for more than 25 years.

Shortly after the announcement, SQM said it would voluntarily comply with a demand this month by Chile’s internal revenue service to hand over tax information for the last six years. Contesse had tried to block the move but he was rejected by the courts.

Authorities are investigating whether money from SQM and other companies was channeled illicitly to electoral campaigns for the Independent Democratic Union (UDI), Chile’s biggest conservative party.

The head of the UDI resigned last Wednesday. UDI is part of a right-wing coalition with 44 seats in the lower house of parliament, compared with President Michelle Bachelet’s ruling left wing coalition’s 67 seats. UDI has eight senators and Bachelet’s coalition 21.

The owners of financial firm Banco Penta have already been charged with bribery and tax evasion in a scandal that has angered Chileans, proud of their reputation for being one of the least corrupt and most investor-friendly economies in Latin America.

Prosecutors say they have evidence that fake receipts used by Penta’s owners to dodge taxes were used to make illegal campaign finance contributions.

“Market worries”

SQM is no stranger to scandal. Last year, Chile’s financial regulator fined brokers and company executives including chairman Julio Ponce, Pinochet’s former son-in-law, over market manipulation.

SQM’s deputy CEO and company veteran Patricio de Solminihac will take over from Contesse, the firm said. Brokers at BanChile said in a note that the appointment was “good news” and “a first step towards confronting market worries linked to the company’s corporate governance.”

SQM has struggled with lower iodine prices and seen its shares fall around 10 per cent in March. On Tuesday they were trading flat at 14,200 pesos, valuing the company at around US$6 billion.

Saskatoon-based fertilizer giant PotashCorp owns about a 32 per cent stake in SQM’s dual-share structure and appoints three of the eight board seats.

— Rosalba O’Brien is the senior correspondent for Reuters’ bureau in Santiago, Chile. Additional reporting for Reuters by Antonio de la Jara.

The post Chile’s campaign finance scandal fells fertilizer firm’s CEO appeared first on Canadian Cattlemen.

Saskatoon-based PotashCorp sold 2.5 million tonnes of potash, the most ever in a fourth quarter and up 42 per cent year over year. Its average realized potash price was $284 per tonne, up marginally from a year earlier.

Prices have been slow to recover since the breakup in mid-2013 of one of the world’s biggest potash traders, Belarusian Potash Co., but softer prices have stimulated demand.

“We saw a balance here, and part of the reason is affordability,” said Potash Corp CEO Jochen Tilk in an interview. “And we expect that to be the case this year.”

Tilk is reviewing equity stakes in China’s Sinofert Holdings, Israel Chemicals, Jordan’s Arab Potash Co. and Chile’s SQM, with an eye toward taking control.

That review could take 12 months, Tilk said, adding that PotashCorp has not spoken with the Israeli government.

Potash tried to buy control of Israel Chemicals under previous CEO Bill Doyle, but was rebuffed in 2013 by the Israeli government, which holds a golden share.

PotashCorp, the second-biggest potash producer after Russia’s Uralkali OAO, reported fourth-quarter profit of 49 cents per share, beating the average analyst estimate of 46 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 23.4 per cent to $1.9 billion, exceeding the average estimate of $1.67 billion.

“I think all in all (Potash results) were pretty positive,” said Robert “Hap” Sneddon, president of portfolio management company CastleMoore Inc.

PotashCorp’s shares closed slightly higher in Toronto and weaker in New York.

The company late on Wednesday increased its dividend by 9 percent.

The outlook for 2015 was mixed.

PotashCorp expects global potash shipments to range between 58 million and 60 million tonnes in 2015, down from a record 61 million tonnes last year, partly due to weakening economic growth outside the United States.

Potash Corp expects to sell 9.2 million to 9.7 million tonnes of potash in 2015, up from 9.3 million last year.

The company expected full-year 2015 profit of $1.90 to $2.20 per share. The middle of that range, $2.05, fell short of analysts’ average profit estimate of $2.12.

For the first quarter, PotashCorp sees earnings of 45 to 55 cents per share. Analysts were expecting 50 cents.

— Reporting for Reuters by Rod Nickel in Winnipeg and Sneha Banerjee in Bangalore.

The post PotashCorp’s profit beats on higher potash sales appeared first on Canadian Cattlemen.