SANTIAGO, May 23 (Reuters) - Chile said on Monday it had begun a new arbitration procedure against fertilizer supplier SQM over what it said were “serious contract breaches,” threatening to further darken an already fraught relationship between the government and the company.
SQM , which was privatized in the 1980s under Augusto Pinochet and is still controlled by a businessman with family links to the ex-dictator, is one of the world’s largest suppliers of nitrates and lithium, with access to vast brine deposits in northern Chile.
But it has had a rocky relationship in recent years with Chile’s center-left government. It is already in arbitration with economic development agency Corfo over leasing payments.
The agency was now beginning a second action, Corfo said in a statement.
“Corfo has notified SQM Salar that there have also been serious, varied breaches of obligations in the project contract, in particular regarding the protection of Corfo’s mining property,” it said, without providing more details.
“SQM has seriously and repeatedly breached its contracts and is not a trustworthy partner, which is why its mining contracts should be terminated.”
SQM spokeswoman Carolina Garcia said by email that the company was aware of Corfo’s action and would respond later on Monday.
SQM had previously defended its record and said it would collaborate with Corfo and the arbitrator.
However, it has also flagged its interest in developing ventures outside Chile in recent months, and in March signed a lithium exploration deal in neighboring Argentina.
A decision on the first Corfo case is expected toward the end of the year, SQM said last week. (Reporting by Rosalba O‘Brien; Editing by Richard Chang)