Tianqi in SCM: let it be safe



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For the National Economic Prosecutor's Office, the agreement signed between Tianqi and Albemarle would be just as extractive – as stated earlier in the Senate Mineral Commission – which is proven wrong. For the Peace Corps Defense Court, the evidence provided is not considered because it does not come from the interested party, that is, Tianqi and the Fn. For Corfo, which manages the Salar de Atacama and must ensure its economic value, the agreement between Tianqi and the Feng did not compete with it. For the Government and its concern for 25% of the total Chilean foreign trade with China, support for Tianqi was palpable, as can be seen from the explanations given to his authorities for the "surprise" of this operation. And as a forgotten background, our own DL 211 has been defined as one of the most serious behaviors of assigning zones or market shares.

Following Monday, December 3, the sale of 62,556,568 series of shares of SCM (23.77% of its total capital, with three directors of eight) by Tianqi to Nutrin – the company that is born from the merger of Canadian fertilizer companies PX and Agrium – Bay A value of US $. It. $ 65 per share, or US $ 65 per share It. 4,066 million. On the stock, the value of this session is currently around US $. It. $ 2.6 million, or 35% lower. Tianqi, the bidder, lowered its market value by 50% to US. It. $ 4,700,000 since it made the offer for SCM last May. Why Tianqi then exposed with an opening in the Hong Kong stock and US. It. $ 3.5 billion in debt to finance this operation, with maximum fines in favor of Nutrin for not implementing it, amounted to $ 325 million, according to its Preliminary Prospect?

The non-presentation

The eventual transaction between Tianqi and Nutrin on SCM is not submitted for approval to the US It. Federal A Commission (US FTC) For its competitive implications. The only was announced last February about the alleged merge to claim the sale of two fertilizer plants in the country, it should be noted that nothing has to do with the resolution with the lithium problem that will be visible months later, in May of this Year, with Tianqi's offer on SCM. Therefore, one could say that the free competition authorities of the United States have approved the purchase.

The distribution of the global market

Tianqi is a joint partner of the American album in the largest lithium deposit in the world by Talison, a Joint venture Which involves a lithium equation agreement in Greensbushes, Australia, and one of the territorial distribution of the world Lithium Market associated with the extraction. This global agreement is officially reported to this US. Securities and Exchange Commission (US Sec) When it was agreed, in 2014, as well as subsequently, to the same regulatory entity when consenting the Shareholders agreement that made it explicit, both documents being Available On the official website of the US SEC.

Under the Antitrust Law of the United States, a territorial distribution market agreement, even outside the country, can not be implemented. Due to the law does not matter the type of goods agreed to spread territorial or the degree of mineral purity, but the fund in question: a coordination to avoid competition. The fact of informing these US SEC Of the obligations of nature, obviously, is not entails or can be understood as an approval from them from the point of view of free competition.

Both of these US It. Department of Justice (US Dojo) It. FTC They are now formally informed of this territorial pack for the distribution of the world Lithium Market, and the rate of action they are pursuing is unknown. Both departments are responsible for overseeing compliance with US. It. Antitrust regulations that are born with these Sherman Act of 1890 And those Federal A Commission Act of 1914, Which, among other provisions, prohibits the distribution of markets, And those Clayman Act of 1914, That restricts cross-party, both because of their anti-competitive effects.

For the National Economic Prosecutor's Office (FNE), the intervention between Tianqi and Albemarle would only be extractive – as stated in the Senate Mining Commission last October – which is proven wrong. For the Tribunal for the Challenges of Free Competition (TDLC) the evidence provided is not considered because it has not come from the interested parties, that is, Tianqi and the Fn. For Corfo, which manages the Salar de Atacama and must ensure its economic value, the agreement between Tianqi and the Feng did not compete with it. For the Government and its concern for 25% of the total Chilean foreign trade with China, support for Tianqi was palpable, as can be seen from the explanations given to his authorities for the "surprise" of this operation. And as a forgotten background, our own DL 211 has been defined as one of the most serious behaviors of assigning zones or market shares.

The Chinese intervention

Among the deputies of Greenbushes, Australia (explored under Talion by Tianqi and Albemarle), and Salar de Atacama, Chile (exploited by SCM and Albemarle), 68% of the world of Lithium is originally used as a raw material to be used in different lithium compounds And in various concentrations of it. The eventual association of the three major players through cross-investments and Castle VenturesBy controlling the two largest global lithium deposits, it would not only consolidate an olympoli with negative consequences for Lithium consumers but would also be the only lithium buyer in Chile, which could only damage its economic interests.

The Chinese influence is evident: 50% of the world 's lithium consumption comes into the country, where 49% of the electric vehicle sales are also being found in 2017, which is where the strong future growth in lithium demand lies. Although the last 1.2 million units over 97 million in the global automotive market, by 2027 they are expected to reach almost 20 million. The Chinese consumption of cars was 28 million units in 2017, followed by the United States of 18 million and that of Japan of 5,000,000.

Tianqi is part of a Chinese state strategy that seeks to consolidate its control over raw materials that can be central to the development of electromycity. The lack of transparency in the lithium market only increases the problem.

If we add to the above role Castle Ventures Conditions that China is pushing to access its markets, which incidentally include the automotive sector, then it should be clear that this Tianqi operation in SCM is not at all a passive financial investment, as the FNN, Corfu and the TDLC seem to believe the acceptance An agreement with ineffective positive restrictions that also loses its validity after six years. It is, quite, part of a global strategy of Chinese state capitalism.

The American Dream

Corfo is forced to start an arbitration with Albemarle for his lease contract at the Salar de Atacama, which will keep its projected expansion; Albemarle has been driving the tripling of Talison's production together with Tianqi in parallel and agreed to this month, with Mineral Resources, a new Joint venture From Lithium (Wojina) in Australia, retaining for themselves the commercialization of this; Tianqi would be included with SCM as de facto co-controller, explaining that it does not control; All of the above under the context of a China that does not give up its policies Castle Ventures Conditioned in spite of requests from the United States and Europe and that is, at the very least, the main consumer of lithium. Is not this a common strategy to better coordinate the designs of the lithium market?

It is precisely the answer that is expected to come from the United States's Antitrust authorities, with the importance of the role of Albemarle, Tianqi and SCM-Company, also open in the United States – in the scenario, taking statements from all involved And contrasting hard say, how is the information given to these US SEC. Chile has really been exploring what's happening in the Lithium market and, worse, is giving an antitrust immunity and lending the productive vehicle of the Salar de Atacama to eventually consolidating a true lithium cartel worldwide.

It is hosted by the UN. Government will soon intervene and not only want to avoid an eventual purchase of 23.77% of SCM by Tianqi, but face the incipient lithium cartel, as apparently, with all its consequences, on the contrary that sadly happened in Chile.

Finally, go back to the first question, which, then, does Tianqi hold? Because he probably expects a lithium cartel to be consolidated, even though the market does not share its expectations.

  • The content expressed in this column is the exclusive responsibility of its author, and does not necessarily reflect the editorial or line The counter.
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