Tianqi’s Lithium Gamble Falters as Chile Advances SQM Nationalization
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A $4 billion gamble by one of China’s largest lithium producers on a prized Chilean asset is facing growing risks, after Chilean antitrust regulators approved a deal that effectively shifts control of the world’s richest lithium deposit into state hands — sidelining the Chinese investor despite its significant stake.
On April 24, Chile’s National Economic Prosecutor’s Office (FNE) announced that it had given the go-ahead to the proposed partnership, under which Codelco — the National Copper Corporation of Chile — and SQM will create a new company to mine and sell lithium products from the Atacama Salt Flat, the country’s largest and most valuable lithium resource.
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- Chile’s antitrust authority approved a joint venture between Codelco (51% stake) and SQM (49%) to mine lithium in Atacama, pending China’s antitrust clearance and domestic approvals.
- SQM, with Tianqi Lithium holding a 22% stake, will see profits from Atacama operations diluted, with 70% of net earnings going to Chile’s government from 2025; almost all SQM’s lithium output comes from Atacama.
- Tianqi’s future returns are at risk due to loss of control and profit dilution, despite 80% of SQM’s lithium sales being to China in 2024.
- SQM (Sociedad Química y Minera de Chile S.A.)
- Sociedad Química y Minera de Chile S.A. (SQM) is the world’s second-largest lithium producer, with most of its lithium operations based in Chile's Atacama Salt Flat. Lithium drives 43.3% of its gross profit. SQM is forming a joint venture with Chile’s state-owned Codelco, resulting in Codelco controlling Atacama assets. SQM’s major shareholder is China’s Tianqi Lithium, and its only other lithium project is Mt Holland in Australia.
- Tianqi Lithium Corp.
- Tianqi Lithium Corp. is a Chinese company that holds a 22% stake in SQM, the world’s second-largest lithium producer. Tianqi invested $4 billion in SQM in 2018, mostly financed by loans, but soon faced a liquidity crisis due to falling lithium prices. Due to regulatory restrictions, Tianqi has limited influence in SQM decisions, and the new joint venture with Codelco will sharply reduce Tianqi’s future returns from the Atacama lithium project.
- Mt Holland Project
- According to the article, the Mt Holland project in Australia is SQM’s only remaining lithium asset besides its Atacama operations. In 2024, Mt Holland produced just 4,000 tons of lithium carbonate equivalent (LCE), a small fraction compared to Atacama.
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