Bloomberg — Tianqi Lithium Corp. evaluates legal options after Chile’s securities regulator rejected the Chinese company’s request to seek shareholder approval for a agreement that would allow a state company to take control of an extensive lithium operation.
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In a statement distributed in Chile on Friday, Tianqi sharply criticized the regulator’s decision on a planned alliance between SQM and Codelco, saying the reason behind allowing it to proceed without a vote weakens investor confidence in the Chilean regulatory framework.
In an unusual public criticism of the authorities by a Chinese company, Tianqi seeks to assert its rights as 22% shareholder of SQM and as an international investor. Growing tensions between SQM and its second-largest shareholder create an additional obstacle to Chilean President Gabriel Boric’s new public-private model for the lithium industry.
At stake is a deal that would allow SQM to increase production of the key ingredient in electric vehicle batteries. Without him, SQM may have to close its mining operations when its current contract expires in 2030.
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SQM and Tianqi have questioned each other’s true motivations in the dispute. Tianqi’s frustrations appear to be anchored in the board restrictions he endured as a condition of his $4 billion stake purchase in SQM six years ago. Formally known as Soc. Química & Minera de Chile SA (SQM/B), SQM is the second largest lithium producer in the world. Its main shareholder is Julio Ponce, former son-in-law of the dictator Augusto Pinochet.
In comments circulated locally on Friday, Tianqi said the regulator’s determination that the deal does not constitute a divestment “blatantly contradicts the spirit of the law which seeks to protect investors.” The approach compromises transparency and fairness in corporate operations, she wrote.
Under the terms of the agreement announced on May 31, SQM will cede a majority stake in its prized Atacama salt mine to Codelco in exchange for three more decades of operations. The alliance is part of Boric’s agenda to have greater state control over key battery metal assets while boosting production away from fossil fuels.
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