SQM Falls After Chile Annuls Lithium Concession

Soc. Quimica & Minera de Chile SA, the world’s largest lithium producer, snapped a three-day winning streak after the government withdrew a license for a new deposit of the metal.

SQM, as the company is known, declined 1.5 percent to 28,898 pesos at the close of trading in Santiago, the most in a week. It was the worst performance among members of Chile’s benchmark Ipsa index, which gained 0.3 percent.

“Investors are worried about the potential competition in lithium,” Eric Conrads, who manages $1 billion in Latin American equities for ING Groep NV, said in a telephone interview from New York. “Where SQM had a virtual monopoly, the concession could now go to someone else.”

Chile, which leads world production of the light metal used in cameras and computer batteries, awarded the license to extract as much as 100,000 metric tons of lithium on Sept. 24. SQM supplies about a third of the world’s lithium from the Atacama Salt Lake in northern Chile and bid $40 million to mine a new deposit.

A committee of the mining ministry voted to withdraw the permit after agreeing with losing bidder LI3 Energy Inc. (LIEG) that SQM violated terms of the bidding process because it has a lawsuit against the government. Santiago-based LI3 was part of a group led by South Korea’s Posco (005490) that was outbid by SQM. Deputy Mining Minister Pablo Wagner resigned over the handling of the bidding process earlier today.

Lithium is considered a “strategic” resource under Chilean laws. Princeton, New Jersey-based Rockwood Holdings Inc. (ROC) also mines lithium in Chile.

Demand for the metal may triple in the next eight years on increased use of electric vehicles powered by lithium batteries, Wagner said last month.

To contact the reporters on this story: Matt Craze in Santiago at mcraze@bloomberg.net; Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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