An interesting take on the SQM/Chile decision....

An interesting take on the SQM/Chile decision.

http://www.twitlonger.com/show/n_1sqddvo

To remove the political overhang on SQM is a huge breath of fresh air for the company- after all, they were slated to effectively be done mining in the Atacama in 2022 as their lease was due to be finished.
However- I really couldn't imagine a worse outcome... save for itself no agreement at all...
Their current royalty rate of 6.8% now jumps to nearly 30% (assuming pricing of 14k+ per metric ton)

The real winner in this arbitration wasn't SQM or Chile- but rather Argentina... which has already embraced lithium mining with open arms, and today compared to even yesterday, looks incrementally better...

If you want to play SQM- avoid SQM stock like the plague- and buy their JV partners with both hands- LACDF who is their brine partner in Arg looks to be the single lowest cost/highest margin project on the planet now, and KDR who is their hardrock partner in Australia should be good too- and might even end up being higher margin then Atacama after factoring in the new royalty rates.

Don't get me wrong- even at 30% royalty, SQM will be making a handsome profit on their efforts, but it is no-where near the % returns they were making before.