(Adds additional material from interview)
By Ernest Scheyder
SANTIAGO, June 10 (Reuters) - Tianqi Lithium Corp is happy for now with its stake in rival SQM and is working to deepen business ties with the Chilean lithium producer, the Chinese company’s president said on Monday.
Tianqi last December bought a 23.8 percent share in SQM from Canadian fertilizer company Nutrien for $4.1 billion, the largest deal in history for a lithium asset. Lithium is a key material used to make electric car batteries.
An agreement with SQM limits Tianqi’s access to certain strategic business information. Still, the deal was seen by many as a shrewd expansion by the Chinese company into the country with the world’s largest supply of the white metal.
“We are happy for now. We are still trying to understand the business better and find a better way to help,” Tianqi President Vivian Wu told Reuters in an interview ahead of the Fastmarkets Lithium Supply and Markets Conference in Santiago.
Wu said she traveled earlier this month to Chile’s Atacama desert, visiting SQM’s lithium brine operations and meeting with the company’s executives. During that trip, Wu met with representatives from Pampa Group - SQM’s largest shareholder - including its head, Julio Ponce Lerou, who initially opposed the Tianqi-SQM deal.
The Pampa relationship “has come a long way in the last six months,” Wu said. “We feel very good about it.”
An SQM spokeswoman declined to comment.
SQM said last month it would delay a key expansion of production capacity from the Atacama until the end of 2021 amid a slump in prices for the battery metal. Wu on Monday called the delay “understandable.”
“We understand for any new project expansion, it takes time,” Wu said, adding she “fully supports” SQM’s plans to sell more lithium in Chile’s domestic market.
The London Metal Exchange (LME) on Monday said it would partner with Fastmarkets to provide a reference price for its planned new lithium contract.
Wu said the contract is “going to be helpful for us” and should bring more clarity to the market.
“This is going to help reduce (lithium) price volatility,” said Wu.
Spot lithium prices in China have dropped double digits since January as the country moves to phase out electric vehicle subsidies. Despite the drop, Wu said she believes Chinese prices will stabilize, benefiting Tianqi.
“The lithium industry is solid and strong,” she said. “The industry is just taking its time to adapt.” (Reporting by Ernest Scheyder; Additional reporting by Dave Sherwood; Editing by Andrea Ricci)