February 6, 2018 / 8:41 PM / 14 days ago

UPDATE 1-Nutrien closing in on selling stakes in SQM, Arab Potash Co -CEO

(Updates with CEO interview)

By Rod Nickel

WINNIPEG, Manitoba, Feb 6 (Reuters) - Canadian fertilizer and farm supply dealer Nutrien Ltd is actively dealing with prospective buyers of its stakes in lithium producer SQM and Arab Potash Co Plc, its chief executive said on Tuesday.

Nutrien is selling minority stakes in those companies as part of pledges to regulators who approved this year the merger of Agrium and Potash Corp of Saskatchewan, which created Nutrien.

“We have buyers for both,” Chief Executive Chuck Magro said in a phone interview from Palm Springs, California. “It’s a pretty active process now and so they’re going through all those stages they normally go through to look at the assets and do their due diligence.”

Magro declined to say how many parties were considering a purchase of each stake.

“Things can take very different turns, but our perspective is things are going very well today,” he said.

Interest in the SQM stake has been strong due to huge forecast demand for lithium, which is used in electric vehicles. The pending sale received a further boost last month when Chilean development agency Corfo struck a deal with SQM in a royalty dispute, freeing SQM to apply for an increase in its production quota.

Nutrien may sell the Arab Potash stake in the second quarter, Chief Financial Officer Wayne Brownlee said on an earlier call with analysts. The company is aiming to sell the SQM stake sometime in 2018.

Timing is difficult to predict because of the role of regulators in approving deals, Brownlee said.

Nutrien owns 32 percent of Chile’s SQM, and about 28 percent of Arab Potash. The sales are likely to generate net proceeds of $3.8 billion, according to the Bank of Montreal.

Nutrien shares tumbled 3 percent to C$58.56 in Toronto, paring earlier losses, after the company’s first full-year outlook disappointed investors.

The company, which operates six Canadian potash mines, wants to shift production to its lowest-cost facilities, said Raef Sully, president of Nutrien’s potash business on the analyst call.

All options are on the table, including closing higher-cost mines, and may be reviewed in the second half of the year, Sully said. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Jonathan Oatis and Tom Brown)

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