SQM (NYSE: SQM), the world’s second largest lithium producer, has signed an earn-in agreement with Talga Group(ASX: TLG), a company specializing in battery anode and advanced materials, to jointly advance the Aero lithium project in northern Sweden. Under this agreement, the Chilean lithium miner can earn up to a 70% interest in Aero by funding up to $19 million in exploration spending over a seven-year period.
Talga will maintain all rights and obligations over graphite minerals at Aero and will receive a management fee for each stage of the earn-in deal. Additionally, Talga will be awarded a “success fee” if a decision to mine is made. Mark Thompson, managing director of Talga, expressed that collaborating with SQM presents an opportunity to build a European lithium supply center. “As one of the few potentially large-scale lithium hard rock opportunities in Europe, Aero might be significant to the region’s battery and electric vehicle industry,” Thompson said.
Once the earn-in period concludes, both parties must contribute to further expenditures proportionate to their ownership stakes or face dilution. SQM International Lithium division CEO, Mark Fones, stated that the deal with Talga aligns with SQM’s strategy to build a global and competitive lithium asset portfolio. “Expanding into new and promising jurisdictions, such as Sweden, has been a strategic goal for us, and partnering with Talga, who has demonstrated expertise in the region, further enhances this achievement,” Fones noted.
SQM’s expansion efforts began about three years ago, initially targeting Australia. In July, SQM reached an earn-in deal with Tambourah Metals (ASX: TMB) for the Julimar North project in Western Australia. Subsequently, SQM acquired a 30% interest in Australia’s Pirra Lithium, with an option to increase its stake to 40%. SQM also formed a partnership with Hancock Prospecting, owned by Australia’s richest person, Gina Rinehart, for the Azure’s Andover project.
In addition to international ventures, SQM holds a 50/50 interest with Wesfarmers in the Mt. Holland lithium mine in Western Australia, which commenced operations in March. This operation is expected to produce enough lithium hydroxide to power nearly one million new electric vehicles annually for fifty years.
Domestically, SQM has expanded its lithium carbonate capacity, aiming to produce 210,000 tonnes this year and 240,000 tonnes by 2025, with a target of 305,000 tonnes of lithium carbonate equivalent by then. The company recently signed an agreement with copper giant Codelco, granting the state-run miner a majority share in the new partnership while extending SQM’s lease in the Atacama salt flats through 2060.
