Chile nixes lithium concession awarded to SQM

SANTIAGO Mon Oct 1, 2012 10:14pm EDT

SANTIAGO Oct 1 (Reuters) - Chile has revoked a decision allowing local firm and world No.1 lithium producer SQM to develop a new concession to produce the mineral in the country, the government said on Monday, after a rival bidder challenged the terms of the deal.

Chile is the world's top supplier of lithium, widely used in products ranging from hybrid vehicles to smartphone batteries, accounting for around 40 percent of global supplies.

Contracts for lithium production can be awarded under special circumstances despite a constitutional ban on concessions that has curbed output.

Rival bidder Li Energy Spa said that SQM had not met the tender's requirements as it has legal matters pending with the state.

Lithium, iodine and fertilizer firm SQM had been awarded a 20-year concession on Sept. 24 for around $40.6 million.

The mining ministry said late on Monday that the entire lithium tender had been invalidated. Other bidders had included a consortium comprising Li Energy, Posco Ltd, Mitsui & Co and Daewoo International Corp.

Some in Chile had decried the tender, accusing the government of surrendering a valuable resource to private hands.

Critics had also blasted the ministry for awarding the concession to SQM, whose chairman is ex-dictator Augusto Pinochet's former son-in-law and whose chief operating officer is the brother of Mining Minister Hernan de Solminihac.

The minister did not participate in the development of the lithium contracts to avoid a conflict of interest, however. (Writing by Alexandra Ulmer; Editing by Joseph Radford)

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