Sunday , June 26 2022

Tianqi f & # 39; SQM: to be demonstrated



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For National Economic Prosecutor's Office, the agreement signed between extractive only Tianqi and Albemarle is – as stated before the Commission of Mines Senate – which is proven wrong. For the Court of Free Competition Defense, the evidence provided was not considered because it was derived from the directly interested parties, namely, Tianqi and CEF. For Corfo, which manages the Salar de Atacama and must ensure its economic value, the agreement Tianqi and CEF did not compete with it. Government and its concern for 25% of the total foreign trade of Chile with China, supporting Tianqi was palpable, as evidenced by the explanations given its authorities to "scrutiny" & # 39 ; this operation. And as forgotten background, our own DL 211 defined as one of the most serious conduct assigning areas or market shares.

Monday & # 39; rear, 3rd & # 39; December, sales & # 39; 62,556,568 shares of series A & # 39; SQM (23.77% of its total capital, with three directors & # 39; eight) by Tianqi to nutrients – the company born from Canadian fertilizer companies PCS and Agrium- b & # 39; & # 39 value ; US $ 65 per share, or US $ 4,066 million. On the stock exchange, the value & # 39; this participation is currently about US $ 2,600 million, or 35% less. Tianqi, the bidder, reduced its market value b & # 39; 50% to USD 4,700 million as tenderer for SQM in & # 39; last May. Why Tianqi then persist in opening the bag & # 39; Hong Kong and USD 3.5 billion in & # 39; debt to finance this operation, b & # 39; maximum fines for nutrients because they do not implement it, amounting to USD 325 million, according to its preliminary prospectus?

Failure & # 39; presentation

The – any transaction between Tianqi and nutrients on SQM not presented for – approval to – Office a & # 39 Federal Trade Commission, the United States (US FTC) for its competitive implications. This was only last February the merger aforementioned asking sales & # 39; two plants & # 39; fertilizer contained in & # 39; that country, it should be noted that nothing had x & # 39; intersects with & # 39; this resolution with lithium problem that will take months obvious, f & # 39; May a & # 39; this year, a proposal & # 39; On Tianqi SQM. Therefore, one can & # 39; says that free competition authorities of the United States approved this purchase.

The distribution of global market

Tianqi is a joint partner in the US Albemarle largest lithium deposit in the world through & # 39; Talison, a joint venture agreement involving lithium extraction in Greenbushes, Australia, and one of the regional distribution of the world lithium market associated with & # 39; this extraction. This – a global agreement was officially reported to – US Securities and Exchange Commission (US SEC) when it was agreed, in 2014, and subsequently, the same regulatory body when it accepted the Shareholders Agreement made explicit, both documents were available on – official website – US SEC.

According to the law of the United States antitrust, & # 39; territorial distribution market agreement, even abroad, can not be implemented. For this law no matter the type & # 39; agreed territorial distribute goods or the degree of & # 39; mineral purity, but the fund in question: coordination to avoid competition. The – that inform – US SEC a & # 39; of & # 39 agreement; Such obviously does not involve or you & # 39; construed as approval from the perspective of free competition.

Both – US Department of Justice (US DOJ) as the US FTC now formally informed by & # 39; this territorial pact for the distribution of the world lithium market, and the action that will follow is unknown. Both departments are responsible for overseeing compliance with regulations & # 39; the antitrust & # 39; US born with Act & # 39; of & # 39 Sherman; 1890 and – Federal Commission Act of 1914 Trade, which, among other provisions, prohibit the distribution markets, and – The Act & # 39; 1914 of Clayton, restricting the mutual participation, both because of their anti-competitive effects.

For National Economic Prosecutor's Office (CEF), the agreement signed between Tianqi and Albemarle will extractive only – as stated in the Mining Senate Commission in & # 39; last October – is proven wrong. For Tribunal for Defense of Free Competition (TDLC), the evidence provided was not considered because it was not coming from the parties directly concerned, namely, Tianqi and CEF. For Corfo, which manages the Salar de Atacama and must ensure its economic value, the agreement Tianqi and CEF did not compete with it. Government and its concern for 25% of the total foreign trade of Chile with China, supporting Tianqi was palpable, as evidenced by the explanations given its authorities to "scrutiny" & # 39 ; this operation. And as forgotten background, our own DL 211 defined as one of the most serious conduct assigning areas or market shares.

The Chinese intervention

Between deposits & # 39; Greenbushes, Australia (exploited under Talison by Tianqi and Albemarle), and Salar de Atacama, Chile (exploited by SQM and Albemarle), 68% of the world's lithium originates as a raw material to be used under different lithium compounds and f & # 39; & # 39 various concentrations; this. The possible union of the three key players through & # 39; investments and investments joint venturesBy controlling the two largest global lithium deposits, not only oligopoly fostering b & # 39; negative consequences for end consumers of lithium, but also becomes the only lithium buyer in Chile, you can & # 39; only harm its economic interests.

The Chinese influence is evident: 50% of the consumption of lithium world occur in & # 39; that country, where 49% of the sales of electric vehicles also occurred in 2017, in which strong growth future demand of lithium. Although the latter were 1.2 million units & # 39; over 97 million global car market until 2027 are expected to reach nearly 20 million. The Chinese automobile consumption was & # 39; 28 million units in 2017, followed by that of the United States & # 39; 18 million and that of Japan & # 39; 5 million.

Tianqi is part of the Chinese state strategy which seeks to consolidate its control over the raw materials that can & # 39; is central to the development of electromobility. Failure & # 39; transparency in the lithium market only increases the problem.

Adding to & # 39; that & # 39; above the – role – joint ventures Conditions China is pushing to access its markets, which incidentally include the automotive sector, then it should be clear that this operation & # 39; Tianqi f & # 39; SQM is nothing passive financial investment, since the CEF, Corfo and TDLC seem to believe that by accepting an agreement & # 39; & # 39 ineffective restrictions; behavior also lose its validity after six years. It is, rather, part of a global strategy of capitalism & # 39; the Chinese state.

The American dream

Corfo was forced arbitration begins with & # 39; Albemarle to its lease contract in the Salar de Atacama, which will cease its projected expansion; Albemarle led triplikazzjoni production of & # 39; & # 39 Talison plus; Tianqi b & # 39; parallel and earlier this month, b & # 39; Mineral Resources, new joint venture Lithium (Wodjina) in Australia, which holds itself marketing & # 39; it; Tianqi SQM entering a de facto co controller, stating that it does not; foregoing below in the context of & # 39; China renounces its policies & # 39; joint ventures conditioned despite calls from the United States and Europe and is, by far, the major consumer of lithium. This is a common strategy to better coordinate the lithium market designs?

It is precisely this response that is expected to antitrust US authorities, b & # 39; particular importance to the role of & # 39; Albemarle, Tianqi and SQM company-also opened in Uniti- States f & # 39; this scenario, by taking statements, as it stands – information given to – US SEC. Chile had given in practice to really investigate what is happening in the lithium market and, worse, giving antitrust immunity and lends the production vehicle of the Salar de Atacama to eventually consolidate a true lithium cartel to aLL OVER THE wORLD. .

One must hope that the authorities & # 39; the United States will soon intervene and oblige not only to remove any purchase & # 39; 23.77% of & # 39; SQM from Tianqi, but facing the beginning of the cartel lithium as it appears, with all its consequences, as opposed to & # 39; unfortunately what happened in Chile.

Finally, go back to the initial question, why, then, the Tianqi persist? Because he probably expects lithium consolidate cartel, even if the market does not cross his expectations.

  • The content expressed in & # 39; this column & # 39; opinion is the sole responsibility of the author, and do not necessarily reflect the editorial line or position & # 39; The Counter.
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