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China's Tianqi nears $4.3 billion deal to buy stake in Chile's SQM - sources

HONG KONG/TORONTO (Reuters) - China’s Tianqi Lithium is nearing a deal to buy a 24 percent stake in Chile’s Sociedad Quimica Y Minera (SQM) SQMa.SN, one of the world’s biggest lithium producers, for about $4.3 billion, two people close to the transaction said.

Chengdu-based Tianqi, which is building the world’s biggest lithium processor in Western Australia, is looking to sign a deal to acquire the stake in SQM from Canadian fertilizer company Nutrien Ltd (NTR.TO), the people said.

Nutrien, formed by the merger of Agrium and Potash Corp of Saskatchewan, must sell its stake in SQM by next March as part of a commitment to regulators approving the deal. Nutrien owns about 30 percent of SQM, which also has significant fertilizer production.

The more actively traded B-shares of SQM SQM_pb.SN jumped as much 6.8 percent to a four-month high after the Reuters report. Nutrien shares extended gains, hitting a near two-month high, and were up 2.3 percent at C$66.19.

Based on SQM’s market value of $14.8 billion at Monday’s close, Tianqi would pay a roughly 22 percent premium for the shares in the world’s lowest-cost producer of lithium.

Tianqi’s interest comes as Beijing aggressively promotes electric vehicles - lithium is a key ingredient in rechargeable batteries - to combat air pollution and help domestic carmakers leapfrog the combustion engine to build global brands.

But the SQM stake purchase could hit snags.

Chile’s former government in March asked antitrust regulator FNE to block the stake sale to Chinese firms, saying it would distort the global lithium market and give China an unfair advantage in securing strategic resources. FNE has until August, with the possibility of extensions, to determine whether to launch an investigation.

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