Chilean Regulator Approves Nationalization of SQM; Second-Largest Shareholder Tianqi Lithium Faces Increased Investment Risks | Going Global · Geopolitics (AI Translation)
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文｜财新 卢羽桐
By Lu Yutong, Caixin
【财新网】中国头部锂企天齐锂业（002466.SZ）早年斥40亿美元参股的全球第二大锂开采商智利化工矿业公司（NYSE：SQM，下称SQM）国有化一事获得当地反垄断部门批准，目前仍有待中国反垄断政府部门的批准。
[Caixin Global] China's leading lithium producer, Tianqi Lithium Corp. (002466.SZ), which invested $4 billion years ago to acquire a stake in Sociedad Química y Minera de Chile (NYSE: SQM)—the world's second-largest lithium miner—has now seen the state nationalization of SQM approved by Chile’s local antitrust authorities. The deal still awaits approval from Chinese antitrust regulators.
当地时间4月24日，智利国家经济检察官办公室（下称FNE）公告，批准智利国家铜业公司（Codelco）与智利化工矿业公司（SQM）的公私合营计划，即两家公司成立一家合资企业，从事开采、生产和销售智利最大锂盐湖阿塔卡马（Atacama）的矿物，主要是锂盐产品。
On April 24 local time, Chile’s National Economic Prosecutor’s Office (FNE) announced its approval for a public-private partnership plan between Corporación Nacional del Cobre de Chile (Codelco) and Sociedad Química y Minera de Chile (SQM). Under the plan, the two companies will establish a joint venture to mine, produce, and sell minerals—primarily lithium products—from Chile’s largest lithium salt flat, the Atacama.
智利国家矿业当日披露，除了FNE的同意外，上述合营计划也已经获得了巴西、韩国、日本、沙特阿拉伯和欧盟反垄断机构批准。至此，所需的大部分国际监管授权均已实现，只剩下中国反垄断部门尚未批准。
Chile’s National Mining Company revealed that, in addition to approval from Chile’s National Economic Prosecutor’s Office (FNE), the aforementioned joint venture has also received antitrust clearance from regulators in Brazil, South Korea, Japan, Saudi Arabia, and the European Union. With these approvals, the project has now secured most of the major international regulatory authorizations required, leaving only the Chinese antitrust authorities yet to grant approval.
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- Chile’s regulators approved a joint venture between state-owned Codelco (51%) and SQM (49%), nationalizing SQM’s Atacama lithium operations; final approval from Chinese antitrust authorities is pending.
- Tianqi Lithium, SQM’s second-largest shareholder with a 22.16% stake, will see reduced influence and profits as the Chilean government will take 70% of future profits; SQM contributed 43.3% of its gross profit from lithium in 2024.
- Tianqi’s $4 billion investment in SQM faces risks, as SQM’s Atacama mining rights are extended to 2060 but under majority Chilean control, impacting Tianqi’s future returns.
China’s leading lithium producer, Tianqi Lithium, faces uncertainty following Chile’s approval of the nationalization of Sociedad Química y Minera de Chile (SQM), one of the world’s largest lithium miners. Tianqi, which invested $4 billion to acquire a 22.16% stake in SQM, is the firm’s second-largest shareholder. The nationalization process revolves around a new joint venture between SQM and Chile’s state-owned copper producer, Codelco. This partnership, involving operations in Chile’s Atacama Salt Flat, recently received approval from Chilean antitrust authorities, as well as regulators from Brazil, South Korea, Japan, Saudi Arabia, and the European Union. The last major regulatory hurdle is approval from Chinese antitrust authorities, which is needed due to the significance of the Chinese market for both SQM and Codelco. [para. 1][para. 2]
The joint venture agreement, signed in May 2024, grants Codelco a 51% controlling stake and consolidates the venture’s financial performance into Codelco’s books starting in 2030. As a result of this development, control shifts decisively towards the Chilean government. While Tianqi retains its sizeable holding in SQM, its influence and potential returns are at risk. The Atacama Salt Flat is SQM's principal source of lithium, accounting for almost all of the company's 201,000 tons of lithium carbonate equivalent (LCE) produced in 2024. Loan arrangements for Tianqi’s SQM investment were highly leveraged, and past industry downturns left the company with a precarious financial position, though it later stabilized and repaid its related debts through a successful Hong Kong listing. [para. 3][para. 4][para. 9][para. 10]
SQM’s lithium business is crucial, representing 43.3% of its gross profit in 2024. The pending joint venture means that most of those assets and profits will eventually be transferred away from SQM. Under the joint venture terms, from 2025 onward, 70% of operating profits will go to the Chilean government. By 2031, SQM is expected to lose control over its core Atacama operations, diminishing Tianqi's returns from its investment. Despite multiple requests, Tianqi has been excluded from negotiations and decision-making, owing to earlier legal agreements that barred it from consolidating SQM’s operations, partaking in operational decisions, or accessing sensitive internal information. Chile’s antitrust authorities imposed additional restrictions on directorships to prevent conflicts of interest and sensitive data leaks. [para. 5][para. 6][para. 11][para. 12][para. 13][para. 14][para. 15][para. 16][para. 17][para. 18][para. 19][para. 20][para. 22]
SQM exported 80% of its lithium products to China in 2024, totaling about 164,000 tons and generating roughly $1.79 billion in revenue. However, overall lithium prices slumped, resulting in a nearly 40% year-on-year revenue decline to $4.53 billion. Codelco, for its part, relies on China for 42% of its copper sales, with copper production reaching 1.44 million tons and revenue of $17 billion in 2023. These deep ties to China’s market make approval from Chinese antitrust regulators crucial. If the authorities determine that the partnership does not restrict competition, they may grant unconditional approval or require remedies. [para. 21][para. 23][para. 24][para. 25][para. 26][para. 27][para. 28][para. 29]
Overall, Tianqi’s strategic bet on SQM—attracted by Atacama’s premium lithium resource—faces grave challenges as Chile’s nationalization redirects profits and control to the state, threatening the returns and influence that drove Tianqi’s original $4 billion investment. [para. 30][para. 31][para. 32][para. 33][para. 34][para. 35][para. 36][para. 37][para. 38][para. 39][para. 40][para. 41][para. 42]
- Tianqi Lithium
- Tianqi Lithium is a leading Chinese lithium producer holding a 22.16% stake in Chile’s SQM, the world’s second-largest lithium miner. Tianqi invested $4 billion in SQM in 2018 but faces challenges as SQM undergoes partial nationalization and enters a joint venture with Chile’s state-owned Codelco. The nationalization is set to reduce Tianqi’s earnings and influence over SQM’s key lithium assets in the future.
- Sociedad Química y Minera de Chile (SQM)
- Sociedad Química y Minera de Chile (SQM) is the world's second-largest lithium producer, sourcing most of its lithium from the Atacama salt flat in Chile. In 2024, it produced about 205,000 tons of lithium carbonate equivalent (LCE), with 80% sold to China. SQM is forming a joint venture with Chile's state-owned Codelco, resulting in government control over its key Atacama lithium assets starting in 2031.
- Corporación Nacional del Cobre de Chile (Codelco)
- Corporación Nacional del Cobre de Chile (Codelco) is the world’s largest copper producer, based in Chile. In 2023, China accounted for 42% of its copper sales. In 2024, Codelco produced 1.44 million tons of copper, regaining its position as the world's top copper producer. Codelco is forming a joint venture with SQM to mine lithium from the Atacama salt flat, holding a 51% stake in the partnership.
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