SANTIAGO (Reuters) - Talks to resolve a legal dispute between Chilean authorities and Sociedad Quimica Y Minera (SQM) (SQMa.SN) have ended at an impasse, leaving the fate of the company’s lease of lithium reserves to a judge, the government said on Monday.
Chile’s state-run development agency Corfo has alleged that the chemical and fertilizer producer has failed to meet contractual obligations in its lease agreement with the government. SQM says it has fully complied.
Corfo has demanded early termination of SQM’s SQM_pb.SN (SQM.N) lease in the Salar de Atacama, home to some of the world’s most productive lithium deposits.
The unresolved dispute has weighed heavily on the company’s stock at a time when lithium demand continues to rocket on the back of its increased use in the batteries that power electric vehicles and mobile phones.
Corfo’s head Eduardo Bitran told reporters on Monday that the government’s demands remain unchanged.
“There’s been no agreement between Corfo and SQM, and for this reason we will continue to insist that the Salar of Atacama be returned to the state by the company,” Bitran said.
In a statement, SQM said it remained hopeful a deal could be reached.
“SQM remains convinced that it has fulfilled its obligations in its contractual relationship with Corfo, and maintains its disposition to reach an agreement,” SQM said.
A decision in the arbitration, begun in May 2014, is expected by year’s end. SQM, which was privatized in the 1980s under former dictator Augusto Pinochet, is controlled by businessman Julio Ponce, the strongman’s former son-in-law, and is one of the world’s largest suppliers of nitrates and lithium. Corfo’s head has repeatedly criticized Ponce, and told Reuters in January that developing a good relationship with SQM was impossible while Ponce remained in control. Ponce was fined for market manipulation in 2014.
Reporting by Felipe Iturrieta, Writing By Dave Sherwood, Editing by Rosalba O'Brien