Tianqi Lithium’s Profits Soar by 1,800%!

Tianqi Lithium: A Phoenix Reborn! On April 20, Tianqi Lithium released its first-quarter 2026 earnings forecast. The company’s net profit attributable to shareholders is expected to reach RMB 1.7–2.0 billion, representing a staggering year-on-year increase of 1,530.31%–1,818.01%—more than five times its full-year 2025 profit. Tianqi Lithium attributes this explosive growth to two main factors: First, improved industry fundamentals. This is indeed true: China’s new-energy vehicle (NEV) market fully rebounded in Q1 2026, with over half of mainstream brands reporting sequential sales growth exceeding 70%. Meanwhile, lithium carbonate prices continued rising—reaching RMB 172,500 per ton on April 20, nearly 50% higher than the beginning-of-year level. Second, strong performance from its equity investee SQM, which generated substantially higher investment income year-on-year. So who—or what—is SQM? What is its historical relationship with Tianqi Lithium? And can it continue delivering robust profits going forward? A RMB 28-Billion Gamble That Secured Eight Years of Profit SQM stands for Sociedad Química y Minera de Chile (Chemical and Mining Company of Chile). Its crown jewel is the exclusive mining and operating rights to the Atacama Salt Flat in Chile—the world’s largest lithium-rich brine resource. For Tianqi Lithium—a lithium-focused enterprise engaged in lithium resource development, lithium concentrate production, and lithium chemical manufacturing—this asset was irresistibly attractive. Moreover, Tianqi had already established a pattern of acquiring equity stakes in companies to secure lithium resources. In 2013, Tianqi acquired Talison Lithium, gaining control of the world’s largest hard-rock lithium mine—the Greenbushes Lithium Mine. In 2014, it acquired a 20% stake in Zhaxi Zabuye, securing exclusive exploitation rights to the Zabuye Salt Flat—the largest lithium brine lake in Asia. Thus, in 2018, Tianqi set its sights on SQM. That year, it spent USD 4.066 billion (approximately RMB 2.7811 billion at the exchange rate prevailing on payment date) of self-raised funds to acquire a 23.77% equity stake in SQM. Recall that at year-end 2017, Tianqi’s net assets totaled only RMB 10.635 billion, and its cash and cash equivalents stood at just RMB 5.524 billion—making the RMB 2.8-billion price tag seem astronomical. Undeterred, Tianqi adopted an all-or-nothing approach, borrowing USD 3.5 billion from several banks. By end-2018, Tianqi’s short-term borrowings and long-term borrowings had surged to RMB 1.941 billion and RMB 25.326 billion respectively—up 2.31-fold and 17.67-fold from end-2017 levels. Its debt-to-asset ratio jumped 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 transformative: with this single transaction, Tianqi secured an ironclad lithium supply chain. In the very year of acquisition, SQM supplied 13% of global lithium output, while Talison—the asset Tianqi had previously acquired—supplied 27%. Combined, Tianqi effectively controlled 40% of the world’s lithium supply.

Lithium Companies’ 2025 Earnings Rebound: A Feast for Miners, a Struggle for Processors?

Rongye Shares: lithium concentrate gross margin = 53.12%; consolidated gross margin = 51.18%. Tianqi Lithium: lithium ore product gross margin = 52.88%; lithium salt product gross margin = 28.6%. Ganfeng Lithium: gross margin for lithium series products = 15.52%; overall gross margin ≈ 15.8%. Shengxin Lithium Energy: overall lithium product gross margin = 18.35%; domestic business gross margin = as low as 14.51%. These figures reveal that both Rongye Shares and Tianqi Lithium enjoy upstream (mining) gross margins above 52%, yet once entering the processing stage, Tianqi’s lithium salt gross margin drops sharply to 28.6%, while Ganfeng and Shengxin fall further into the 15%–18% range. The reality of the lithium industry in 2025 follows the logic of “resources reign supreme,” where self-sufficiency in raw materials draws the line between profitability and loss. For companies with high self-sufficiency rates, a 10% rise in lithium prices may translate into a 20% profit surge; those with moderate self-sufficiency capture only partial upside, but remain weighed down by low-margin processing operations; and those with low self-sufficiency see costs rise almost in lockstep with prices—e.g., a 10% lithium price hike may be offset by an 8% cost increase, leaving only meager earnings. Take Ganfeng Lithium as an example: through equity stakes and controlling interests, it holds resources including Mount Marion and Goulamina, achieving an overall resource self-sufficiency rate of 50%–60%. Yet nearly half its feedstock must still be purchased externally. Coupled with its massive lithium salt processing capacity (targeting 600,000 tons annually by 2030), low-margin processing drags down consolidated profitability. In 2025, Ganfeng reported RMB 1.613 billion in net profit attributable to shareholders—but its non-recurring-adjusted net profit was negative RMB 385 million. Excluding nearly RMB 2 billion in non-recurring gains—including PLS share price appreciation and proceeds from subsidiary disposals—Ganfeng’s core operations were unprofitable. Gross margins distinguish ‘rich mines’ from ‘poor mines’; profitability quality further separates ‘real earnings’ from ‘paper profits.’ Tianqi Lithium turned profitable in 2025, posting RMB 463 million in net profit attributable to shareholders. Yet a closer look at its income statement reveals that its equity investee SQM (Sociedad Química y Minera de Chile) alone contributed RMB 665 million in investment income. Put simply: absent SQM—the ‘money god’—Tianqi’s core operations remained unprofitable in 2025. Moreover, SQM’s status as a ‘profit stabilizer’ is now under threat. Starting in 2031, SQM will lose control over its core Atacama lithium operations. Tianqi sued to challenge this—and lost: Chile’s Supreme Court issued a final ruling rejecting its appeal in January 2026. Tianqi’s ‘profit stabilizer’ may soon become a ‘profit disruptor.’ By contrast, Rongye Shares posted RMB 279 million in net profit in 2025—driven entirely by volume growth in core operations—suggesting higher earnings quality. However, alongside surging revenue and profits, Rongye’s operating cash flow declined 31% year-on-year, inventory ballooned 339%, and accounts payable surged 413%. This signals that much of Rongye’s earnings remain ‘in transit,’ and rapid expansion has come at the cost of deteriorating capital efficiency. Finally, Shengxin Lithium Energy reported an RMB 888-million loss in 2025—of which RMB 542 million stemmed from asset impairment losses, RMB 218 million from foreign exchange losses, and RMB 136 million from hedging losses. Shengxin did not lose money due to lithium prices—it lost money on financial derivatives and currency fluctuations.

Sociedad Quimica y Minera de Chile Q1 2026 Earnings Preview

May 26, 2026

Analysts preview Sociedad Quimica y Minera de Chile's Q1 2026 earnings, anticipating key financial metrics and potential market reactions ahead of the official release. Investors are keenly watching performance amid current market conditions.

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