Why does Tianqi Lithium still need to watch SQM even as lithium prices rise?

Summary: Tianqi Lithium’s profits do not stem solely from its own lithium products. As a significant associate company, SQM contributes investment income under the equity method—which flows directly into Tianqi’s profit and loss statement. When analyzing lithium price movements, it is essential to separately verify these two distinct profit drivers. When lithium prices rise, many investors instinctively look first at Tianqi Lithium’s mines and lithium product selling prices. Yet another critical line item in Tianqi Lithium’s profit and loss statement cannot be overlooked: investment income from SQM under the equity method. This does not mean SQM is more important than Tianqi’s core operations; rather, it means that attributing improved profitability solely to rising lithium prices—or assuming such improvement reflects stronger performance of Tianqi’s own business—is misleading. Why does SQM affect Tianqi Lithium’s profit and loss statement? SQM (Sociedad Química y Minera de Chile S.A.) is a Chilean chemical and mining company engaged in lithium, potassium, and other businesses. According to Tianqi Lithium’s 2025 annual report, as of the reporting date, Tianqi Chile held a 21.90% equity stake in SQM, while Tianqi Lithium Hong Kong held an additional 0.20%. Such investments in associate companies are generally accounted for using the equity method. In simple terms, SQM’s operating results—proportionate to Tianqi’s shareholding—flow into Tianqi Lithium’s “investment income” line, rather than being consolidated into Tianqi’s operating revenue. Therefore, when reading Tianqi Lithium’s profit and loss statement, at least two items must be analyzed separately: ・ Volume, realized selling price, cost, and gross margin of self-operated lithium products; ・ Investment income recognized from associate and joint venture enterprises (e.g., SQM). Although both lines relate to the lithium industry, they appear in different sections of the profit and loss statement and require distinct verification methods. In Q1 2026, SQM contributed to profit growth—but was not the sole driver Tianqi Lithium’s Q1 2026 earnings report shows a net profit attributable to shareholders of RMB 1.876 billion, and a non-recurring net profit of RMB 1.816 billion. Its reported investment income totaled RMB 475 million, of which RMB 428 million came from associates and joint ventures. The company disclosed in its Q1 report that year-on-year growth in average selling prices of key lithium products drove increases in both revenue and gross profit; simultaneously, SQM’s expected year-on-year earnings growth led to higher investment income recognized from this associate. This disclosure should not be misread as “profits entirely driven by SQM,” nor should SQM be dismissed as irrelevant. Rather, the correct interpretation is: current profit improvement stems from at least two sources—changes in volume, pricing, and gross margin of self-operated products, and changes in investment income from associate enterprises.

Tianqi Lithium’s profits surged by 1,800%! Why?

Tianqi Lithium: A phoenix reborn! On April 20, Tianqi Lithium released its Q1 2026 earnings forecast. For the quarter, the company’s net profit attributable to shareholders is projected at RMB 1.7–2.0 billion—a staggering year-on-year increase of 1,530.31% to 1,818.01%, exceeding five times its full-year 2025 profit! The company attributed this explosive growth to two main factors: First, improved industry fundamentals. This is indeed true: In Q1 2026, China’s new energy vehicle market fully rebounded, with over half of mainstream brands reporting sequential sales growth exceeding 70%. Meanwhile, lithium carbonate prices continued their upward trend—reaching RMB 172,500 per ton on April 20, nearly 50% higher than the beginning-of-year level. Second, strong performance by its investee company SQM, resulting in substantially higher investment income compared to the same period last year. So who exactly is SQM—and what is the history between Tianqi Lithium and SQM? Looking ahead, can SQM continue delivering substantial profits to Tianqi Lithium? A RMB 28-billion gamble That secured eight years of profit SQM—short for Sociedad Química y Minera de Chile S.A.—holds the most valuable asset in the global lithium industry: exclusive mining and operational rights to the Atacama Salt Flat in Chile, the world’s largest lithium brine reserve. For Tianqi Lithium—a company whose entire business revolves around lithium, spanning lithium resource development, lithium concentrate production, and lithium chemical manufacturing—this asset was irresistibly strategic. Moreover, Tianqi had already established a track record of acquiring lithium resources via corporate equity purchases. In 2013, Tianqi acquired Talison, gaining control of Greenbushes—the world’s largest hard-rock lithium spodumene mine. In 2014, it acquired a 20% stake in Zhaxi Zabuye, securing exclusive exploitation rights to Zabuye Salt Flat—the largest lithium-rich salt flat in Asia. Thus, in 2018, Tianqi set its sights on SQM. That year, it acquired a 23.77% stake in SQM for USD 4.066 billion—approximately RMB 2.7811 billion at the time of payment. Consider this: At year-end 2017, Tianqi’s net assets stood at only RMB 10.635 billion, and its cash balance just RMB 5.524 billion. Paying RMB 2.8 billion was akin to spending an astronomical sum. Undeterred, Tianqi adopted an all-or-nothing approach—securing USD 3.5 billion in loans from multiple banks. By end-2018, Tianqi’s short-term and long-term borrowings reached RMB 1.941 billion and RMB 25.326 billion respectively—up 2.31-fold and 17.67-fold from year-end 2017. Its debt-to-asset ratio soared from 40.39% to 73.26%. Cash holdings plummeted from RMB 5.524 billion to RMB 1.943 billion—down nearly two-thirds within one year. This RMB 2.8-billion acquisition was, without exaggeration, a high-stakes gamble for Tianqi Lithium. The bet paid off. The results were immediate and profound: With this single transaction, Tianqi secured a rock-solid lithium supply chain. In the very year of acquisition, SQM supplied 13% of global lithium output, while Talison—acquired earlier by Tianqi—supplied 27%. Together, Tianqi effectively controlled 40% of the world’s lithium supply.

Sociedad Quimica y Minera Q3 2026 Earnings Date and Estimates

Oct 20, 2026

Sociedad Quimica y Minera (NYSE:SQM) is scheduled to report Q3 2026 earnings on November 17, with analyst estimates of $2.02 per share and $2.21 billion revenue. The lithium and specialty chemical producer previously beat consensus estimates in Q2 2026.

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