China’s Tianqi Reminds SQM of Hurdles in Codelco’s Landmark Lithium Pact

(Bloomberg) -- Just days after celebrating a landmark deal to share ownership of one of the world’s biggest lithium operations, SQM and Codelco are turning to regulatory — and possibly legal — obstacles.

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Tianqi Lithium Corp., the Chinese firm that owns a 22% stake in SQM, filed a statement Monday reminding the market of its pending request with Chilean securities regulators to rule on whether the partnership requires a shareholder vote. Announcing a deal without that clarity is “a worrying precedent in terms of corporate governance,” Tianqi wrote.

“We will not hesitate to resort to all necessary legal bodies to guarantee the full recognition and respect” of minority shareholder rights, Tianqi wrote in the June 3 filing.

Under terms announced Friday, SQM will relinquish a majority stake in its prized Atacama salt flat mine to state-owned Codelco in exchange for three more decades of operations. The tie-up with the world’s second-biggest lithium supplier is part of Chilean President Gabriel Boric’s agenda to have more state control in key assets of the battery metal while boosting output in the shift away from fossil fuels.

Read More: Codelco to Enter Lithium Market After Signing Deal With SQM

Tianqi pointed to negative aspects of the deal in its statement, including dividend dilution and SQM losing control after 2030 when its current license runs out. But it also noted the risk of losing the asset altogether if the transaction with Codelco fails. The deal also requires antitrust approvals and indigenous consultation.

Tianqi’s frustrations appear to be anchored in the boardroom restrictions it has endured as a condition of its purchase of the $4 billion stake six years ago. SQM’s top shareholder is Julio Ponce, the former son-in-law of dictator Augusto Pinochet.

--With assistance from Olivia Tam.

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