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Chilean Miner SQM Sells Green Bond to Meet Growing EV Battery Demand

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SQM Sells Green Bond to Meet Growing Demand for EV Batteries

Chilean mining company SQM, the world's second-largest lithium supplier, has entered the US investment-grade bond market to address the increasing demand for rechargeable batteries used in electric vehicles (EVs). The company recently sold $750 million in dollar-denominated green bonds with a 10-year maturity. The proceeds from these green bonds will be allocated to finance projects related to lithium extraction and processing for EV batteries and energy storage. As lithium is a crucial component in rechargeable batteries, the demand is expected to rise as the world shifts away from fossil fuels.

ESG Bonds in Latin America

SQM's green bond offering is part of a broader trend in Latin America, where companies and governments have raised about $9.8 billion in environmental, social, and governance (ESG) bonds denominated in US dollars and euros this year. This represents a decline of 37.6% compared to the same period last year.

Sustainable Practices and Expansion

SQM's green bond issuance coincides with its negotiations for a new contract under Chile's public-private model, which emphasizes sustainable practices. The company has allocated over $2 billion for technologies that reduce the use of underground fresh water, enhance the efficiency of the brine evaporation process, and introduce direct extraction methods. Additionally, SQM has been expanding its operations in Australia and recently announced a $1 billion offer to acquire Azure Minerals Ltd, a Perth-based company. In conclusion, SQM's green bond issuance reflects the increasing demand for EV batteries and the company's commitment to sustainable practices in the lithium mining industry. This move aligns with the global transition toward clean energy and highlights the importance of financing projects that support the growth of the EV sector.

Hot Take: SQM's Green Bond Sale and its Impact on New Businesses

SQM's recent sale of green bonds to meet the growing demand for EV batteries signals a significant shift in the clean energy landscape. This move by the world's second-largest lithium supplier could have far-reaching implications for new businesses in this sector.

Increased Demand for Lithium

As lithium is a key component in rechargeable batteries, the demand for this element is expected to surge as the world transitions away from fossil fuels. This presents a golden opportunity for new businesses in the lithium extraction and processing industry to capitalize on this growing market.

ESG Bonds and Sustainable Practices

SQM's green bond offering is part of a wider trend in Latin America towards environmental, social, and governance (ESG) bonds. This trend, despite a decline this year, highlights the increasing importance of sustainable practices in business operations. New businesses should take note of this shift and incorporate ESG principles into their strategies to attract investors and ensure long-term viability.
Expansion Opportunities
SQM's expansion into Australia and its commitment to sustainable practices underscore the potential for growth in this sector. New businesses can learn from SQM's approach and explore similar expansion opportunities and sustainable practices to gain a competitive edge in the clean energy market.
Story First Published at: https://financialpost.com/pmn/business-pmn/chile-miner-sqm-sells-green-bond-to-feed-ev-battery-demand
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