China’s Tianqi Lithium buys stake in Chile’s SQM for more than $4bn

China’s Tianqi Lithium has agreed to acquire a 24 percent stake in Chile’s SQM, one of the world’s largest lithium producers, in a deal worth $4.07 billion, the companies announced Thursday.

The Chengdu-based Tianqi will buy up the shares in SQM owned by Canada’s Nutrien, according to a statement issued by the Canadian firm.

Lithium is a key component used to make electric car batteries. China is the world’s biggest market for electric cars.

“This is an attractive investment for Tianqi Lithium which fits well within our existing business strategy,” Tianqi’s president Vivian Wu said in the statement.

Listed on the Shenzhen stock exchange, Tianqi Lithium is one the world’s biggest suppliers of lithium products, with operations in China and Australia.

SQM exploits what is considered the world’s largest lithium deposit in Chile’s northern Atacama desert, an area with high concentrations of lithium with low levels of impurity, as well as byproducts like potassium.

Global demand for lithium, on the rise since 2014, is expected to grow at rates of six to eight percent over the next decade.

A relatively rare light metal, lithium is used to make batteries as well as other industrial applications.

With 52 percent of the world’s reserves, Chile competes neck and neck with Australia for the global markets, with each accounting for close to 40 percent of the world’s production.

Argentina, which increased its lithium production by 58 percent in 2016, has about 15 percent of the market.

Chile expects to nearly double its lithium production by 2021, from 77,000 tons in 2017 to 147,000, as US chemical company Albemarle and SQM expand their operations in the Atacama salt flats.