NTR Nutrien Ltd

By Micah Maidenberg 

China's biggest lithium company, Tianqi Lithium Corp., won a favorable court ruling, moving it closer to becoming the second-largest shareholder in a major producer of the metal used in electric-vehicle batteries.

On Thursday, a Chilean court signed off on an agreement that Tianqi struck with the country's competition regulator over its proposed $4.1 billion acquisition of about 24% of shares in Sociedad Quimica y Minera de Chile SA, or SQM.

The court said the agreement was "proportional and sufficient to mitigate" risks of Tianqi's acquisition of the SQM stake. Under the deal, which lasts up to six years, Tianqi agreed it wouldn't appoint its directors or employees to the SQM board and promised that its appointees wouldn't disclose SQM's confidential information, among other measures.

Earlier this year, Tianqi struck a deal to buy the SQM stake for close to $4.1 billion from fertilizer company Nutrien Ltd., which needs to sell it to meet requirements from Indian and Chinese regulators related to a separate transaction.

A former government official in Chile, however, challenged the deal earlier this year, asking for an antitrust review.

SQM currently controls about 18% of global lithium production capacity, while Tianqi controls 10%, making the companies the second-largest and third-largest players in the market, according to data from IHS Markit. U.S.-based Albemarle Corp. is the largest, controlling 25% of production capacity.

Should Tianqi complete the deal as planned, the lithium-production industry would become more intertwined. Tianqi and Albemarle, for example, also operate a mine together in Australia in a joint venture.

SQM had asked the court to reject the agreement, stating that the deal between Tianqi and the competition regulator didn't provide enough safeguards against potential harm to its business from a having a significant competitor as a major shareholder. SQM said in a statement Thursday it is analyzing the court's decision.

Tianqi said it welcomed the court's decision on a deal that "safeguards competition and ensures the highest level of corporate governance practices are put in place at SQM after our minority investment is completed."

"We are confident that all stakeholders will benefit from Tianqi's contributions to SQM's long-term development," Tianqi said.

Tianqi and Nutrien both said Thursday they expect the deal for the SQM stake to close in the fourth quarter this year.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

October 04, 2018 20:01 ET (00:01 GMT)

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