China’s Tianqi to Keep Fighting for Say in SQM Lithium Deal

(Bloomberg) -- Tianqi Lithium Corp., a key shareholder in Chilean miner SQM, will continue its battle for a say in a deal that would determine ownership of one of the world’s biggest lithium operations, the Chinese producer’s chief executive said.

Authorities in Santiago have been pushing for the state to have a more significant role in managing the country’s lithium resources. A landmark deal earlier this year between SQM and state-owned Codelco would see the lithium miner relinquish a majority stake in its prized Atacama salt flat mine to Codelco in exchange for three more decades of operations. 

Chilean regulators have ruled that the agreement can proceed without investor approvals, clearing the way for the transaction to close early next year. Yet Tianqi, which holds a 22% stake in SQM, has pushed back, heading to court to force a shareholder vote. The case is under appeal. 

“We do not rule out pursuing any legal measures necessary to safeguard the legitimate rights of shareholders,” Chief Executive Officer Frank Ha said in a written response to questions.

Chile’s investor-friendly reputation would be tarnished if the deal passed without shareholder approval and greater transparency, he added.

“A country with a sound legal system, a good business environment and respect for foreign investors is the cornerstone of our confidence in investing in Chile,” Ha said. If those fundamentals change, “we believe it will not only affect Tianqi, but also Chile’s international image and the long-term development of its industries.”

Tianqi is one of China’s biggest processors of the electric vehicle battery metal, and bought its stake in SQM — the world’s second-largest lithium producer — six years ago to diversify its supply base. Lithium prices have plunged since late 2022 due to an increasing glut, but demand is still expected to eventually take off as the energy transition gathers pace. 

The Chinese firm’s frustrations appear to be anchored in boardroom restrictions it has endured since paying $4 billion for its SQM stake. Some of those are set to be lifted by year-end, while others will expire in April, the company said. 

Besides being SQM’s second-largest shareholder, Tianqi is also a competitor of the Chilean firm in the global lithium market, SQM CEO Ricardo Ramos told lawmakers on Monday. The Chinese company is the only shareholder to object to the way the transaction was approved, Ramos was quoted as saying.

SQM’s top shareholder is Julio Ponce, the former son-in-law of dictator Augusto Pinochet, who ruled Chile in the 1970s and 80s. 

While Tianqi hopes it can exercise all of its legitimate rights as an SQM shareholder, Ha said the company hadn’t received a positive response from repeated approaches to ministerial departments to undertake more downstream investments in Chile’s lithium industry.

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