Tianqi criticizes Chile's financial regulator, prepares legal action over SQM-Codelco deal

China's Tianqi Lithium is preparing legal action to reverse the decision of Chile's financial market regulator CMF after it rejected the firm's request to oblige local lithium producer SQM to hold a shareholders' meeting to discuss the public-private deal with state-owned miner Codelco.

"Our legal teams are carrying out an exhaustive analysis of this decision. We express our deep concern in this regard, especially in relation to the incorrect interpretation of the corporations law and the protection of the rights of minority shareholders," Tianqi said in a statement on Friday.

The Asian company owns a 23% interest in SQM and has complained on several occasions about the confidential nature of negotiations between SQM and Codelco, and the fact that it was excluded from talks in which the bases of a joint company were established, to be formed by SQM Salar and Codelco subsidiary Minera Tarar.

In the CMF's opinion (which can be downloaded in the Documents box at the top right of the screen), according to law No. 18,046, there is no obligation to hold a shareholders' meeting, since "there has been no transfer of assets or right of control of the subsidiary SQM Salar."

Tianqi claims that this is a "contradictory argument" on the part of the CMF, since although it states that SQM would lose control over its subsidiary to Codelco, which will have 50% +1 control of the mixed company that will conduct operations in the Salar de Atacama in 2025-60, it does not consider that this represents a "disposal of assets."

"The thesis put forward by the CMF dangerously resembles the use of legal structures aimed at evasion or avoidance in other legal contexts," the Tianqi statement reads. "This will open the door to legal subterfuges that damage the fundamental rights of non-controlling shareholders," it adds.

The Chinese company claims that CMF's decision contradicts the spirit of the law, which is intended to protect investors, thus undermining transparency and fairness in corporate agreements and subsequently weakening investor confidence in the Chilean regulatory framework.

"This not only affects Tianqi's rights and interests as a minority shareholder in SQM but also undermines the role of shareholders' meetings in protecting shareholders' rights and overseeing critical strategic decisions that can impact investment," it says.

Tianqi is a giant in the lithium production sector, with various plants and facilities in China and Australia, which are the world's largest lithium consumer and producer, respectively.

It also has a presence in Chile, acquired in 2018 after it made a US$4 billion payment to buy its 23% stake in SQM, in a transaction seen as risky due to the hegemony both companies stood to gain in the global lithium market at the time.