Tianqi Lithium: The 'Lithium King' with Mines at Home—How Genuine Is the Cyclical Turnaround?

We must first clarify the current market position: As of July 7, 2026, spot prices for battery-grade lithium carbonate stand at approximately RMB 164,000–166,000 per ton (Tonghuashun: RMB 164,500/ton; Business Network benchmark: RMB 166,000/ton), placing them at a mid-to-high level for the year (yearly low: RMB 62,033/ton; yearly high: RMB 199,000/ton). Yet within June alone, prices retreated from RMB 178,900/ton (early June) to RMB 153,900/ton (end-June futures), rebounding slightly in early July—indicating high-level consolidation rather than sustained upward momentum. Should lithium prices fall back into the RMB 100,000–120,000/ton range in H2, the earnings impact is directly quantifiable (see Chapter VI Sensitivity Analysis): Tianqi’s profit sensitivity stands at ~RMB 550 million per RMB 10,000/ton change. Thus, each RMB 10,000/ton decline reduces net attributable profit by roughly RMB 500–600 million. A neutral-case drop from RMB 150,000 to RMB 120,000/ton (a RMB 30,000/ton decline) would trim net profit by ~RMB 1.5–1.8 billion, compressing the neutral forecast range (RMB 5.5–7.0 billion) to ~RMB 3.7–5.2 billion. A further decline to RMB 100,000/ton (RMB 50,000/ton total drop) would reduce net profit to ~RMB 2.5–4.0 billion—approaching or even breaching the upper bound of the bearish scenario. In short, the robustness of the three-scenario projection hinges critically on whether lithium prices can hold above RMB 120,000/ton—this is also the most vulnerable point underpinning the current RMB 59 valuation. Risk #2: The 'Chilean nationalization' shadow over SQM (dilution of control—quantifiable). The timeline is clear: On May 31, 2024, SQM signed a 'Partnership Agreement' with Codelco; on December 27, 2025, the strategic cooperation was completed, and the joint venture SQM Salar was officially renamed Nova Andino Litio SpA ('Novandino') following its merger with Minera Tarar; by 2031, Atacama Salt Flat development rights are expected to be fully transferred to Chile’s state-owned enterprise. Concurrently, the Chilean government is pushing for a ~70% increase in national lithium output (via Novandino expansion), implying rising supply and a corresponding erosion of Tianqi’s proportional share of benefits. Three Quantitative Questions: 1. How is investment income diluted? Tianqi’s 21.9% equity stake remains unchanged, but SQM’s economic interest in the Atacama Salt Flat declines due to Codelco’s carve-out. Tianqi’s indirect share of Atacama profits = 21.9% × (SQM’s retained Atacama share). If Codelco captures roughly half of Atacama’s economic rights, Tianqi’s indirect share falls by ~50%. In 2025, SQM contributed ~RMB 665 million in investment income to Tianqi (143% of Tianqi’s net profit); long-term contributions may shrink to ~RMB 300–400 million (rough estimate, subject to final allocation terms)—marking the core shift of this 'invisible profit pipeline' from 'long-term passive gains' to 'time-limited, diluted returns'. 2. How much cash can be raised via share reduction? The company plans to sell up to 3.566 million SQM Class A shares (≤1.25%), with a book value of USD 206 million (~RMB 1.4 billion as of February 3, 2026); at the prevailing market price (SQM ~USD 80/share), proceeds would amount to ~USD 285 million (~RMB 2.0 billion). For reference, SQM’s market cap stood at USD 23.871 billion on January 28, 2026; Tianqi’s stake was valued at ~USD 5.289 billion—exceeding its initial 2018 investment of USD 4.066 billion. 3. Impact on the balance sheet? The share sale would generate ~RMB 2.0 billion, representing ~4.7% of Tianqi’s attributable net assets (RMB 42.362 billion), modestly boosting cash and slightly lowering the debt ratio—without affecting operations. However, long-term investment income will decline, diminishing the 'passive gain' advantage previously derived from SQM.

Commentary on the '002466 Tianqi Lithium Acquisition of SQM Equity' Event

To determine whether this event is bullish or bearish, we must first address several core questions: 1. What does SQM do—and how sound is its asset base? 2. Is USD 65 per share a fair acquisition price? 3. What changes will the acquisition bring to '002466 Tianqi Lithium'? Question 1: What does SQM do? According to its business license, SQM—'Sociedad Química y Minera de Chile'—produces specialty plant nutrients and chemicals. Its specialty plant nutrients are used in organic fertilizers and nutrient solutions; it extracts and manufactures iodine derivatives. Its lithium products serve primarily rechargeable battery production. Per Wind data, SQM operates in the fertilizer and agrochemical industry. Public news reports indicate that ~60% of global lithium resources lie in Chile, Argentina, and Bolivia, with the remainder concentrated in Australia and North America. Four mining giants—SQM, FMC, Talison, and Rockwood—control ~90% of the world’s high-quality lithium resources, conferring exceptional industry dominance. These four firms monopolize ~90% of premium global lithium resources—and SQM is one of them. Listed on the NYSE on September 21, 1993, SQM’s longstanding global presence underscores its elite status—a strong positive signal. Yet rational investors rely on fundamentals—not hype. In my view, regardless of global ranking or resource control, only companies generating—or credibly expected to generate—profits qualify as 'good investments.' Let’s examine the financials: (Data sourced from Tongda Xin’s U.S. stock F10 database) From the three tables above, SQM’s 2017 annual report (note: foreign firms may set their own fiscal years; SQM’s aligns with A-share reporting cycles) shows total assets of USD 4.436 billion, shareholders’ equity of USD 2.253 billion, revenue of USD 2.255 billion, and net income of USD 428 million. Key metrics derived for A-share comparability: ROE = 18.99%, net margin = 18.99%, debt-to-asset ratio = 49.21%, and operating cash flow coverage of net income = 130%. SQM’s financials—ROE = 18.99%, net margin = 18.99%, debt ratio = 49.21%, and 130% cash conversion (i.e., all net income converted to cash, not tied up in receivables or other working capital)—would indeed qualify it as a high-quality firm on the A-share market. Its status as one of the four global lithium oligopolists controlling ~90% of top-tier lithium resources adds further credibility. Question 2: Is USD 65 per share a fair price? First, see chart below: Note 1: SQM has traded continuously on the NYSE since its listing on September 21, 1993. The chart above covers the period from 2012 to June 1, 2018. Note 2: SQM issues two classes of shares on the NYSE—Class A (142,819,552 shares outstanding) and Class B (120,376,972 shares outstanding). Visually, SQM closed Friday at USD 51.45 per share. Acquiring at USD 65/share implies a 26.33% premium—i.e., paying 26.33% more than the market price. But wait—another question arises: Is USD 51.45/share truly SQM’s fair valuation?

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Sociedad Quimica y Minera de Chile reported record lithium sales in Q2, yet its stock is deemed 44.9% overvalued at $74.47 versus an intrinsic value of $51.41. Institutional interest remains mixed despite strong fundamentals.

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