Chile's state-owned copper producer Codelco plans to buy out Australia-listed Lithium Power International (LPI), with LPI's major shareholder Chilean firm Minera Salar Blanco throwing its support behind the deal.
Codelco and LPI entered into a binding scheme implementation deed, where Codelco acquires LPI through a scheme of arrangement at A$0.57/share ($0.36/share) in cash for a total of A$385mn. The price is at a premium of 119pc to the closing share price of A$0.26/share on 26 September when media speculation relating to the possible deal surfaced, according to LPI on 18 October.
LPI's board of directors has unanimously recommended LPI shareholders to vote in favour of the scheme in the absence of a superior proposal. LPI also said its major shareholder Minera Salar Blanco, which holds 28.25pc of LPI, is going to vote in favour of the scheme, as did the rest of LPI's board members that hold around 32.5pc of LPI either directly or indirectly. LPI's shareholders are expected vote on the deal in January next year.
The acquisition is a logical consolidation in the Maricunga salt flat and will help position Codelco to strongly "execute our strategy of becoming a globally relevant supplier of critical metals to enable the energy transition", said Codelco's chairman Maximo Pacheco.
LPI in 2022 confirmed the potential for its lithium project in Maricunga salt flat to produce 15,200 t/yr of lithium carbonate equivalent over a period of 20 years in its first stage.
The firm previously tried to address concerns and fend off what it claimed "media speculations" surrounding the concessions and permits it has under Chilean law for lithium extraction at the Maricunga lithium project. It claims the concessions it has for the Maricunga project that were obtained prior to 1979 was valid for lithium production, before lithium was defined as a strategic material under the country's military government led by Augusto Pinochet after he overthrew socialist Salvador Allende in a 1973 US-supported Cold War-era coup.
Lithium extraction in Chile since then has been strictly regulated and can only be produced by state companies, or under special lithium operation contracts that have never actually been used. Major lithium producers in Chile, such as SQM and Albemarle, operate on concessions acquired by Chile's economic development agency Corfo prior to 1979.
Corfo more recently awarded half of the lithium portion under its contract with SQM to China's Yongqing Technology. Yongqing plans to invest $233mn in a plant in northern Chile to produce 120,000 t/yr of lithium iron phosphate.
Lithium is one of the key sectors that current Chilean President Gabriel Boric is promoting, with Chile earlier this year launching its national lithium strategy that seeks greater state involvement. LPI was one of the firms supportive of the policy following its initial announcement in April.
