Bank: SQM's La Coruna purchase to steady iodine price

The recent US$13mn purchase by Chilean industrial minerals producer SQM (NYSE: SQM) of the La Coruna metallic iodine mine from Luxembourg-based Falcon Investment Holdings was designed to take capacity off the market, according to investment bankers Celfin Capital. Given that SQM says it has no plans to develop the project in the short or medium term, the acquisition is seen as part of a strategy to ease downward price pressure being brought to bear on iodine, Celfin analysts wrote in a report. SQM could increase its share of global iodine capacity from 40% to 48% were it to eventually develop the mine, they said. The cash purchase brings SQM's capex for 2003 to US$73m, the report added. SQM, the world's biggest iodine and companion mineral nitrate producer, has most of its extraction and processing facilities located in the area of the La Coruna deposit in northern Chile's Region I, 90km from the Pacific port of Iquique. Figures released by former owner Falcon prior to the sale indicate the deposit has 80Mt of reserves grading 500ppm iodine, or 37,000t of contained iodine. To see the full Celfin report (in English) go to http://www.bnamericas.com/rc_search_detail.xsql?id_documento=35596&Tx_idioma=I