Also at Breakingviews:China’s pursuit of rechargeable battery ingredients has hit an amber light in Chile. To clinch a $4.1 billion stake in Chilean giant SQM, Shenzhen-listed Tianqi Lithium has agreed with local antitrust officials to limit access to commercially sensitive information. A hostile shareholder may yet thwart the deal anyway. As Beijing’s clout in the industry grows, such deals will only get tougher.Over the past decade, China’s effort to secure its industrial supply chain has been unparalleled. When Western majors pulled back on spending after the 2011 commodities boom, Chinese miners kept buying, striving to catch up.
Yet despite hefty purchases in a variety of metals, they have not achieved dominance. Success has been more forthcoming in battery ingredients, which have been largely ignored by the major diggers until the recent electric vehicle boom. Beijing has made investments at home, in mines abroad and in equity stakes, as well as in processing the minerals.
The accomplishment helps to explain the rare antitrust pothole in Santiago, as Tianqi tries to secure roughly a quarter of SQM. Certainly, lithium matters greatly to Chile, which holds the world’s largest reserves and wants to diversify a copper-reliant economy. Meanwhile, SQM is one of the top producers of the super-light metal, competing with rivals like Albemarle – already Tianqi’s partner in operating the biggest hard-rock lithium mine, Greenbushes in Australia.
In the end, competition authorities were reassured by an agreement to curtail Tianqi’s access to key details, to bar its own executives from the board and oblige it to warn regulators of any future deals. These are significant curbs for a costly investment, even one the buyer describes as purely financial. And the purchase could still be derailed by a legal appeal from SQM’s influential top shareholder, who held deal talks with Tianqi himself back in 2016.
Whatever the outcome, this is a rare instance of China encountering some pushback in its march to acquire minerals used in everyday devices. Beijing’s grip on lithium and its processing means it is likely to attract more and more attention. For now, shaky prices of the white stuff mean a slower approach may be no bad thing.
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