SQM expands into Africa with $40M Namibia deal

Chile’s SQM (NYSE: SQM), the world’s second largest lithium producer, has received approval from Namibian regulators to proceed with an earn-in agreement worth up to US$40 million with South Africa-based Andrada Mining (LSE: ATM) to jointly develop the Lithium Ridge asset. 

The deal marks SQM’s first African partnership and is expected to accelerate the development of the project, located about 35 km from Andrada’s flagship Uis tin mine. Under the deal, SQM has the option to acquire up to a 50% stake in Grace Simba Investments (GSI), Andrada’s subsidiary that holds the Lithium Ridge licence.

“This approval is the final component required for us to fully launch what will be a transformative partnership,” Andrada CEO Anthony Viljoen said in a statement.

Viljoen emphasized the broader impact of the agreement, highlighting SQM’s planned investment of as much as $40 million as a catalyst for both project development and economic growth in the lithium-rich Erongo region.

Andrada Mining, which will remain the project’s operator, will also receive a success fee if the lithium resource exceeds 40 million tonnes.

Andrada shares were down 2.4% to £2.03 ($2.56) apiece on Friday in London, giving the company a market capitalization of $43.7 million. Its shares traded in a 52-week range of $2.39 to $6.98.