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Sociedad Química y Minera de Chile (SQM) has entered an agreement to sell its subsidiary SQM Potasio’s entire stake in Minera Exar (Exar) to China’s GFL International (Ganfeng) for $87.5m.

Alongside Exar and Ganfeng, Lithium Americas is also involved in the deal. Exar currently owns the Caucharí-Olaroz lithium project in the Jujuy province, Argentina.

“We will focus our efforts on our expansions in Chile, where we expect to almost quadruple our capacity in the coming years.”

As part of the agreement, Exar will prepay the total amount of the loans received from SQM Potasio as well as pay SQM for the services offered to it during the development of the project.

SQM CEO Patricio de Solminihac said: “We expect the lithium market to continue its strong growth, and SQM wants to take advantage of this opportunity to develop projects on a large scale. For this reason, we will focus our efforts on our expansions in Chile, where we expect to almost quadruple our capacity in the coming years.

“We will also focus our efforts in Australia, where we see significant production potential given the size of the existing resources.

“We believe that Ganfeng joining the project is good news. Ganfeng is a well-known player in the industry, and will contribute positively to the project.

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“We maintain our good opinion about the project, and will continue our involvement in it, not only because of the future payment involved with this transaction, but also to support LAC and Ganfeng with the continuity of the project.”

The deal is subject to certain conditions and scheduled to close during the fourth quarter of this year.

In addition, SQM Potasio will sign an agreement with a subsidiary of Ganfeng, under which SQM Potasio will receive a deferred amount of $50m from the subsidiary.

The agreement is subject to compliance with certain product sales targets of the Caucharí-Olaroz lithium project.