UPDATE 2-Chilean regulator says agreement reached with Tianqi on SQM stake sale

(Adds statement from Tianqi)

SANTIAGO, Sept 7 (Reuters) - Chilean anti-trust regulator FNE said on Friday it had reached an agreement with Tianqi Lithium Corp that would allow the Chinese miner to purchase a stake in top lithium producer SQM, pending court approval.

The settlement stipulates that Tianqi can not name one of its executives or employees to SQM’s board, and requires that the Chinese miner notify regulators of any future, lithium-related deal struck with either SQM or top-competitor Albemarle.

“The measures agreed upon...are intended to limit Tianqi’s access to commercially sensitive information held by SQM,” the FNE said in a statement.

Tianqi said in a statement on Saturday that it has agreed to comply with the conditions, which mark an important next step in the process of finalising the investment agreement.

“Tianqi Lithium believes these remedies and conditions go beyond what the law in Chile requires, but has agreed to comply with them as a clear signal of its respect for Chile and its institutions, as well as its commitment to ensure the highest level of corporate governance practices are put in place at SQM,” Tianqi said.

Tianqi said it expects the transaction will be completed within the expected timeframe and close in the fourth quarter of this year.

Tianqi’s interest in SQM comes as Beijing aggressively promotes electric vehicles to combat air pollution and help China’s domestic carmakers leapfrog the combustion engine to build global brands.

The Chilean regulator had launched an investigation in June after Tianqi said it would buy a quarter of SQM for $4.1 billion, giving it a coveted stake in one of the world’s top producers of lithium, a key component in the batteries that power everything from cell phones to electric vehicles.

Chile’s government under former President Michelle Bachelet had requested regulators scrutinize the transaction, alleging the deal would distort the global lithium market.

The FNE said on Friday that its investigation had determined that Tianqi’s purchase of 25.86 percent of the Chilean miner “could generate anti-competitive effects.”

After presenting the results of its investigation to Tianqi, the FNE said, the Chinese miner had responded with a series of measures to mitigate those effects, and that together, the two parties had reached an agreement that “sufficiently preserves free competition in the lithium industry.”

Following the announcement, Tianqi said in a statement it had agreed to the measures “in a clear sign of respect for Chile and its institutions”.

“With this decision...the company is confident that it will complete the transaction within the timeframe originally anticipated,” the statement said.

The settlement must now be approved by Chile’s Anti-Trust Court, which is slated to hear the details of the agreement on Sept. 13. A final decision on the case is due by Oct. 4, the FNE added. (Reporting by Dave Sherwood; Additional reporting by Tom Daly and Elias Glenn in Beijing; Editing by Rosalba O’Brien, Diane Craft and Jacqueline Wong)