2023-07-06 21:16:58
The new lithium policy of Chilean President Gabriel Boric threatens the monopoly of the main mineral exploiter in Chile, the controversial Chemical and Mining Society (Soquimich or SQM), one of the most lucrative companies in the country, best known for its corruption and links with the dictatorship of Augusto Pinochet (1973-1990) than for its millionaire businesses and operations.
Soquimich, controlled for 40 years by Julio Ponce Lerou –former son-in-law of the dictator– and today also by China’s Tianqi, is one of the world’s leading producers of iodine, potassium and fertilizers, but in recent years its main business has focused on lithium that it extracts from the Salar de Atacama, the largest in Chile and the third largest in the world.
Generous contracts signed between 1993 and 1995 with the Production Development Corporation (Corfo), state administrator of the deposit, gave the mining company strategic control of the salt flat in a concession until 2030 (and renewable) with privileged conditions.
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“SQM was and continues to be the regalona [mimada] of the Santiago Stock Exchange, which reports great benefits and profits,” journalist Carlos Tromben, an expert on Chile’s economic powers, told EFE.
“people’s capitalism”
The Soquimich privatization process began in the midst of the dictatorship, in the early 1980s. Ponce, who at the time chaired the SQM board of directors as well as the general manager of Corfo, incorporated up to 30% of private capital into the company, indebted and turned into a burden for the State.
“The workers themselves became, in part, owners of the company through the policy of the so-called “popular capitalism”, promoted by the regime under the motto ‘stop being a proletarian and become an owner,'” explained to EFE the journalist Sergio Jara, investigator of the great Chilean corruption plots.
In a disputed operation, Julio Ponce -together with other executives- bought some time later and at a low price the shares acquired by the workers and grouped in the company Pampa Calichera, from which the businessman created a complex structure of cascading companies to control SQM with little capital.
“The waterfalls are paper companies, with a pyramidal structure that have their chain of control in the Cayman Islands,” Jara explained. According to him, they allowed Ponce to go into debt to buy more shares, improve his position in the company and “place” his friends and associates on the board, such as former Pinochet minister Hernán Büchi, now in office.
Under the command of Julio Ponce
The journalist Víctor Cofré, author of an exhaustive profile on Ponce, describes him as “a controversial and enigmatic character who held public office for almost a decade; he took control of a company, Soquimich, which belonged to the State; He publicly confronted businessmen and major authorities and financed, through the company that he has governed since 1987, politicians of all colors ”.
He also talks regarding an unusual corporate president, “with almost exclusive dedication and permanent presence” in his office and obsessed with lithium.
For some, he was a talented visionary, who lifted Soquimich off the ground and detected a unique opportunity by opening SQM’s doors to lithium. For others, a simple extractivist.
“It is necessary to demystify these big businessmen who present themselves as if they were the only ones capable of exploiting a task with that level of natural resources. You don’t have to be a genius to do it,” said Jara.
With a personal fortune that Forbes magazine estimates today at 3.5 billion dollars, Ponce even maintains power within Soquimich even though he is no longer part of the board of directors, journalists and former workers assured EFE.
According to a former high-ranking official of the company consulted by EFE, “it indirectly controls some companies and can designate three of the eight directors of the company.”
corruption breaks out
In 2015, with almost three uninterrupted decades as chairman of the board, Julio Ponce was forced to resign from his position due to one of the biggest political corruption scandals in Chile, which discovered that the mining company had distributed money irregularly to political sectors of all the colors between 2009 and 2014.
The case coincided with the disclosure of other precedents regarding bad stock market and financial practices of the cascading companies once morest the interests of minority shareholders, including the then former president Sebastián Piñera (2010-2014).
SQM’s prestige ended up sinking following several court sentences for anti-union practices once morest its workers: “The company bought the leaders with perks” and “divided them,” Tranquilino Alucena, a union leader at the time, told EFE.
In the midst of negotiations to extend its lithium concession, Soquimich recently launched a media campaign to renew its image, modernize it and, above all, definitively bury its two great ballasts: links with the dictatorship and corruption.
Source: EFE
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