Major moves by Chile! Is Tianqi Lithium in jeopardy?

If the agreement is implemented, whether Tianqi Lithium’s rights and interests can be effectively safeguarded in the future remains uncertain—for instance, Tianqi Lithium’s investment returns and dividends from SQM, or even the need to make an impairment provision against this investment. Tianqi Lithium has filed an appeal seeking to block the nationalization of Sociedad Química y Minera de Chile (SQM). Is there still room for a turnaround? 1. Background of SQM’s nationalization The story traces back to 2018. That year, Tianqi Lithium invested USD 4.066 billion to acquire a 23.77% equity stake in Sociedad Química y Minera de Chile (SQM), becoming its second-largest shareholder. As of now, it holds approximately 22.16% of SQM’s total shares. At the time, this acquisition stunned both domestic and international markets and was dubbed a “snake swallowing an elephant.” To finance the deal, Tianqi Lithium borrowed USD 3.5 billion from a syndicate of domestic and overseas banks led by China CITIC Bank—burdening the company with heavy debt that later placed immense pressure on it. To alleviate financial strain, Tianqi Lithium had to cede equity in Australia’s Greenbushes mine to IGO, significantly diminishing its pricing power over Australian operations—and ultimately resulting in a massive loss exceeding RMB 4 billion in Q1 2024, drawing widespread attention. In recent years, surging demand from automotive electrification and rising lithium prices brought substantial profits to Tianqi Lithium. Yet as lithium prices declined, the company began facing mounting pressure. Compounding matters, even this “iron rice bowl” now risks slipping away. On December 27, 2023, SQM—a company in which Tianqi Lithium holds a minority stake—reached a non-binding Memorandum of Understanding (hereinafter “MoU”) with Chile’s state-owned National Copper Corporation (Codelco) concerning the operation and development of the Salar de Atacama from 2025 through 2060. The MoU serves as a framework agreement, expressing both parties’ intent to establish a partnership grounded in community harmony and sustainable production of high-quality lithium products at the Salar de Atacama. To achieve this goal, SQM and Codelco will jointly establish a joint venture company. Under the original plan, this joint venture would assume responsibility for the mining quota currently leased by SQM from Chile’s Production Promotion Corporation (Corporación de Fomento de la Producción de Chile, hereinafter “Corfo”)—a body under Chile’s Ministry of Economy—and would manage project execution and global lithium sales. In its announcement, SQM noted that this partnership would enable a smooth transition between “SQM’s current lease agreement with Corfo, set to expire in 2030,” and “Codelco’s lease agreement covering 2031–2060.” We won’t delve into the relevant prerequisite conditions here. Originally scheduled for signing by the end of March 2024, the formal agreement was postponed to May 31, 2024—the date on which it was ultimately signed.

Escalating competition for lithium resources in Latin America: The geopolitical博弈 behind Tianqi Lithium’s marginalization

Recently, Chinese enterprises’ overseas investment projects have repeatedly encountered setbacks amid the U.S.’s open deployment of coercive tactics. How to counter the containment strategy led by the United States has become the top priority—not only now but also for the foreseeable future—in responding to dramatic shifts in the international environment. Text On January 27, 2026, local time in Chile, Tianqi Chile—a wholly owned subsidiary of Tianqi Lithium—received a final ruling from Chile’s Supreme Court rejecting its appeal submitted to the Supreme Court on November 21, 2025, local time in Chile. Regarding the Supreme Court’s final ruling, Tianqi Lithium stated: “We reserve all possible avenues to protect the Company’s rights and interests, and do not rule out further action—provided such action ensures the protection of relevant shareholders’ interests.” On January 28, local time, Sociedad Química y Minera de Chile (SQM) announced that it would establish a joint venture with Chile’s National Copper Corporation (Codelco), into which the divested Salar de Atacama assets would be injected. Available information from multiple sources indicates that the Supreme Court’s final ruling marks the conclusion—after more than one-and-a-half years of judicial proceedings—of the dispute over operational rights to the world’s largest lithium-rich salt flat, the Salar de Atacama. Chile’s legal process for nationalizing the Salar de Atacama has thus been completed, and implementation will now follow. First, a brief chronology of the event: SQM was originally established as a Chilean state-owned enterprise in the 1960s. Later, through a series of maneuvers, it came under the control of the Ponce family—the former son-in-law of Chilean ex-President Augusto Pinochet. The Ponce family, via its holding company Pampa, owns 25.76% of SQM’s shares, making it the largest shareholder. In 2018, Tianqi Lithium invested USD 4.066 billion to acquire a 23.77% stake in SQM, becoming its second-largest shareholder; it currently holds approximately 22.16% of SQM’s total shares. In April 2023, Chilean President Gabriel Boric announced the launch of a nationalization strategy for the lithium industry, mandating that Chilean state-owned enterprises must hold controlling stakes in lithium-related companies. In December 2023, to comply with Chile’s new regulations, SQM entered into the aforementioned MoU with Codelco, followed by the signing of a Partnership Agreement in May 2024. Under this agreement, SQM will relinquish control and management rights over the Salar de Atacama starting in 2031, and its financial statements will be consolidated with those of Codelco. Once formally effective, this agreement means that, beginning in 2031, Tianqi Lithium’s subsidiary and SQM will lose their previously held operational and managerial control. Following the signing of the Partnership Agreement, Tianqi Lithium immediately voiced objections, asserting that the board had exceeded its authority and that Tianqi Lithium had not cast an affirmative vote. Consequently, Tianqi Lithium embarked on a legal redress process lasting over one-and-a-half years. Prior to the Supreme Court’s final ruling, the Partnership Agreement remained ineffective. Chile offered compensation and “incentives” to SQM for its integration into a state-owned entity: First, the lithium extraction rights at the Salar de Atacama were extended from December 31, 2030, to 2060. Second, SQM’s lithium production quota at the Salar de Atacama for the period 2025–2030 was increased by 300,000 metric tons of lithium carbonate equivalent. Second, the Supreme Court’s final ruling may trigger a chain reaction.

SQM announces memorandum of understanding with Codelco

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SQM and Codelco signed an MoU to jointly operate lithium production at Salar de Atacama from 2025 to 2060 via a new company, aiming to secure sustainable supply and strengthen Chile's global lithium market position.

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SQM announces memorandum of understanding with Codelco