SQM sells green bond to feed EV battery demand

The mining company on Thursday sold $750 million in dollar-denominated green bonds maturing in 10 years, according to a person with knowledge of the matter. The single-tranche security will yield about 190 basis points above comparable Treasuries, after initial discussions of around 200 basis points, said the person, who asked not to be identified as the details are private.

The Santiago-based firm last sold green debt in September 2021, raising $700 million in a 30-year bond transaction, according to data compiled by Bloomberg.

Proceeds from green offerings are earmarked to finance a range of eligible projects, including lithium extraction and processing for batteries used in electric vehicles and for energy storage, according to a framework published in 2021. Lithium is a key component in rechargeable batteries used in electric vehicles, with demand set to grow in the move away from fossil fuels.

Latin American companies and governments have raised about $9.8 billion in ESG bonds denominated in US dollars and euros this year through Nov. 2, a 37.6% plunge from the same period last year, according to data compiled by Bloomberg.

A representative for SQM didn’t respond to a request for comment.

The offering comes as SQM negotiates a new contract under Chile’s recently announced public-private model that includes a requirement for more sustainable practices. The company has budgeted more than $2 billion for technologies that enable it to eliminate the use of underground fresh water, make its brine evaporation process more efficient and introduce direct extraction.

SQM has also been expanding in Australia amid those negotiations, and last week announced a $1 billion offer to take over Perth-based Azure Minerals Ltd.

Bank of America Corp., JPMorgan Chase & Co. and Banco Santander SA managed the bond sale, said the person.