(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.
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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. Yet Tianqi, which holds a 22% stake in SQM, has pushed back, heading to court to force a shareholder vote.
“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 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.
SQM, formally known as Soc. Quimica & Minera de Chile SA, is the world’s second-largest lithium producer. Its 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 SQM’s second-largest shareholder, Ha said the company hasn’t received a positive response from repeated approaches to ministerial departments to undertake more downstream investments in Chile’s lithium industry.
Codelco Chairman Maximo Pacheco said in July that Tianqi’s efforts to force a SQM shareholder vote wouldn’t derail the deal. The two Chilean companies said earlier this month that the transaction is on track to close early next year.
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