SQM Seeks Strategic Partner to Fuel Global Lithium Expansion

SQM, the world's second-largest lithium supplier, is actively seeking a strategic partner to help finance its international growth plans, particularly in Australia and Africa. The company is offering a minority stake in its recently formed international lithium division as a way to raise funds for new investments and expansions.

Unlocking SQM's Global Lithium Potential

Expanding Beyond Chile's Atacama

SQM, formally known as Soc. Quimica & Minera de Chile SA, is looking to diversify its operations beyond its home base in Chile's Atacama region. The company is preparing to relinquish a majority stake in its prized Atacama brine operations, which have long been a key source of its lithium production. This strategic move is part of Chile's agenda to have more state control over the country's critical lithium assets while also boosting overall output to meet the growing global demand for the essential battery metal.

Targeting Australia and Africa

With its sights set on international expansion, SQM is particularly focused on strengthening its presence in Australia, the world's top lithium-producing nation. The company is also eyeing opportunities in emerging lithium frontiers, such as Africa, as it seeks to diversify its geographic footprint and capitalize on new growth prospects. By bringing in a strategic partner, SQM aims to secure the necessary funding to develop its new Mt. Holland mine and the Andover project, both located in Western Australia, as well as explore and discover new lithium deposits around the globe.

Leveraging Partnerships for Growth

The search for a strategic partner, being led by JPMorgan Chase & Co., is currently in the early stages. SQM is targeting investment funds and other strategic investors, rather than other mining companies, as potential partners. By offering a minority stake in its international lithium division, the company hopes to attract investors who can provide the necessary capital to finance its global expansion plans without relinquishing full control of its operations.

Navigating a Challenging Market

The decision to seek a strategic partner comes at a time when the lithium industry is grappling with low prices and a global supply glut. By bringing in a new investor, SQM aims to secure the funds needed to expand its operations and maintain its competitive edge, even as other producers are forced to curtail output and spending in response to the market conditions.

Strengthening SQM's Global Footprint

The potential partnership could help SQM accelerate its international growth strategy, which has already seen the company agree to join a lithium project in Sweden and enter an earn-in arrangement in Namibia. With fresh capital, the company can further expand its new mining operations, discover new deposits, and solidify its position as a leading global lithium supplier, poised to capitalize on the growing demand for the essential battery material.