The world's second-largest lithium producer SQM (NYSE: SQM) and the Australian-listed battery anode materials and battery metal mining company Talga Group (ASX: TLG) have signed a cooperation agreement to jointly advance the development of the Aero lithium project in northern Sweden.

According to the agreement between the two parties, SQM will invest a total of 19 million Australian dollars in exploration expenditures in three batches over the next seven years, thereby obtaining a 70% interest in the Aero lithium project.

However, Talga will retain ownership of the graphite mine in the Aero project and will collect management fees at each stage of the revenue transaction. In addition to the Aero lithium mine project, Talga also owns three graphite mines, Vittangi, Jalkunen, and Raitajärvi, as well as the Kiskama and Lautakoski copper-cobalt mine projects.

 

Talga's Jalkunen Graphite Mine

 

Mark Thompson, Managing Director of Talga, said that the Aero lithium mine is one of the few hard-rock lithium mine projects in Europe, and the cooperation with SQM is expected to enable the company to establish an important local lithium supply center in Europe.

 

Mark Fones, CEO of SQM's International Lithium Division, said that the cooperation with Talga is part of the company's strategy to build a globally competitive lithium asset portfolio. Expanding into promising emerging markets such as Sweden has always been the company's strategic goal.

 

SQM began to expand its business outside of Chile three years ago, with the first area of expansion being Australia.

 

In July 2023, SQM reached an agreement with the Australian Tambourah Metals (ASX: TMB) company, obtaining up to 70% of the benefits of six lithium projects in Julimar North, Western Australia, by investing 1.5 to 3 million Australian dollars in exploration costs.

 

At the end of October 2023, SQM also acquired a 30% stake in the Australian Pirra Lithium company and has the option to increase its stake to 40%.

 

In May of this year, SQM also cooperated with Gina Rinehart's mining infrastructure company, Hancock Prospecting, the richest person in Australia. The two parties successfully acquired 100% of the shares of the Australian mining company Azure Minerals (ASX: AZS) with an investment of 1.7 billion Australian dollars, jointly developing the Andover lithium mine project in the Pilbara region, which Azure originally held a 60% stake, as well as potential nickel, copper-cobalt and other resources.

 

In addition, SQM also established a joint venture with the well-known Australian lithium company Wesfarmers, Covalent Lithium, with each holding 50% of the shares, jointly holding and developing the Mt. Holland lithium concentrate project. The mine has been put into operation in March of this year and is expected to deliver 100,000 tons of lithium concentrate in the current fiscal year. The lithium refining plant under construction by the joint venture in Kwinana is expected to be put into operation by the end of 2024. It is expected that after the factory reaches production, it will provide lithium hydroxide for nearly one million electric vehicles every year during the 50-year life cycle of the mine. Ricardo Ramos, CEO of SQM, said at the opening ceremony of the mineral processing plant in March this year, "I want to have 10 different Holland projects in Australia."

 

The Mt. Holland lithium mine and concentrator, which started production in March 2024

 

SQM has also expanded its domestic lithium carbonate production capacity in Chile, with an expected output of 210,000 tons this year, and is expected to reach 240,000 tons by 2025.

 

The company recently signed a public-private partnership agreement with Chile's state-owned copper giant Codelco. If the agreement is finally approved, Codelco will hold the majority of SQM's shares and extend SQM's lease in the Atacama salt flat to 2060. However, the shares of Tianqi Lithium, the second largest shareholder of SQM, are likely to be diluted.

 

SQM has also recently signed long-term lithium supply contracts with Hyundai Motor and Kia Motors, but did not disclose the specific contract period and purchase scale. In addition to the Hyundai Motor Group, SQM's customers also include Ford, LGES, and SK On, among others.