How was the 'bomb' of the 'Lithium King'—a company valued in hundreds of billions—forged?

On the evening of April 23, Tianqi Lithium (002466), a leading lithium mining company, released its preliminary 2024 Q1 earnings forecast, projecting a loss exceeding RMB 3.6 billion. On April 24, Tianqi Lithium opened at its daily lower limit and remained locked there. On April 25, it opened lower again, and by the time of this report, its share price had fallen 6.1%, resulting in a cumulative decline of over 15% across the two days. Immediately after Tianqi Lithium disclosed its Q1 earnings forecast, the Shenzhen Stock Exchange issued a letter of inquiry to the company. On April 24, Tianqi Lithium swiftly held a telephone conference for institutional investors and analysts, attracting over 210 participants from more than 100 institutions—including HSBC, Millennium Capital, Anxin Fund, Boshi Fund, and Goldman Sachs (Asia). Regarding the projected Q1 loss, Tianqi Lithium’s announcement cited two primary factors: first, a sharp year-on-year decline in lithium product selling prices, leading to a substantial drop in gross profit margins; second, a significant expected decline in the Q1 earnings of its key associate company, SQM, resulting in substantially reduced investment income compared to the same period last year. Amid the positive news of new-energy vehicle (NEV) penetration surpassing 50%, how could an upstream lithium industry leader post such a shocking earnings ‘bomb’? What exactly has happened to Tianqi Lithium? A Confluence of Factors Behind the ‘Bomb’ In the new-energy industry, Tianqi Lithium—the so-called ‘Lithium King’—shines like a brilliant star. Yet, just over a week before its Q1 report was due, this lithium giant dropped a stunning earnings ‘bomb’: it projected a Q1 2024 loss of RMB 3.6–4.3 billion. At first glance, the news appears sudden—but in reality, it stems from multiple underlying causes. The first act centers on Tianqi Lithium’s key associate company—SQM. This Chilean lithium mining behemoth recently faced a high-stakes tax dispute ruling—an unexpected meteorite striking SQM’s previously stable profit trajectory. According to SQM’s announcement, the Santiago Court of Chile ruled in April 2024 on SQM’s 2017 and 2018 tax years, overturning the conclusions reached by the Tax and Customs Tribunal in November 2022. This ruling directly impacted SQM’s Q1 net profit by approximately USD 1.1 billion—immediately eroding Tianqi Lithium’s investment income. Although SQM fully paid the assessed tax and its cash flow remained largely unaffected, the impact on net profit cannot be ignored—a brief but intense storm casting a shadow over Tianqi Lithium’s financial statements. The second act shifts focus to Tianqi Lithium’s equity stake in Talison, its Australian lithium mine. To resolve the debt crisis triggered by its acquisition of SQM shares, Tianqi Lithium brought in Australian strategic investor IGO. While this move lowered Tianqi’s debt-to-asset ratio, it also reduced its ownership stake in Talison to 26.01%. This change functions like a double-edged sword. When lithium salt prices are high, Tianqi Lithium receives only one-quarter of the profit pie—while minority shareholders claim the remaining 70%; when lithium salt prices fall, processing profits from spodumene concentrate become insufficient to offset falling ore prices, causing widespread losses across its processing facilities—totaling RMB 9.138 billion in 2023. This profit-distribution structure resembles a symphony alternating between triumph and sorrow.

Tianqi Lithium: How is the ‘trump card’ of the global ‘Lithium King’ finally playing out?

Greenbushes Mine in Western Australia, the Atacama Salt Flat in Chile, and lithium chemical plants in Zhangjiagang (Jiangsu) and Shehong (Sichuan)—these geographic coordinates outline Tianqi Lithium’s global footprint. It does not manufacture batteries or electric vehicles; instead, it operates exclusively at the very top of the industrial chain—mining and processing the so-called ‘white petroleum’. Globally, one out of every five tons of lithium concentrate originates from Tianqi’s Greenbushes Mine; and Tianqi holds approximately 22% of SQM—the world’s largest brine-based lithium producer. Tianqi is the only Chinese lithium company simultaneously holding world-class hard-rock lithium mines and brine resources. On July 14, 2026, Tianqi Lithium’s earnings forecast sent shockwaves across the entire lithium battery sector: it projected H1 2026 attributable net profit of RMB 2.85–4.25 billion, representing a staggering year-on-year growth of 3,276%–4,935%; non-recurring net profit was projected at RMB 2.81–4.2 billion, up over 310,000% year-on-year. On a quarterly basis, Q1 net profit already reached RMB 1.876 billion, while Q2 was forecast at RMB 0.974–2.374 billion. The H1 net profit alone exceeded the full-year 2025 figure (RMB 458 million) by six to nine times. As of early August 2026, battery-grade lithium carbonate prices had rebounded to around RMB 141,000 per ton, and lithium concentrate prices stood at approximately USD 2,060 per ton—up over 70% from the 2025 low point of RMB 80,000 per ton. Industry capacity rationalization is now bearing fruit, and Tianqi’s low-cost advantage positions it as one of the biggest beneficiaries of this lithium price rebound. I. Why Is the Earnings Range So Wide? The RMB 2.85–4.25 billion range spans RMB 1.4 billion—its sole core driver is SQM, a veritable ‘black box’. Tianqi’s profits consist of two major components: lithium concentrate profits from Greenbushes (relatively predictable) + investment income from its equity stake in SQM (highly unpredictable). SQM’s unpredictability arises from three factors: (1) Timing lag—SQM’s financial report is published later than Tianqi’s earnings forecast, forcing Tianqi to estimate blindly; (2) Reliance on external forecasts—Tianqi bases its estimates on Bloomberg’s projected Q2 EPS for SQM, yet Bloomberg’s own forecast is itself a range; (3) SQM’s extreme earnings volatility—Q1 lithium average prices already reached ~USD 18/kg, and Q2 volume and price increases are highly probable. Tianqi knows SQM earned handsomely—but not precisely how much. This RMB 1.4 billion gap is almost entirely attributable to the ‘mystery box’ of SQM’s Q2 performance. Given that Q1 net profit was already RMB 1.876 billion and Q2 volume-price synergy is materializing, the most reasonable narrow-range estimate for H1 attributable net profit is approximately RMB 3.5–4.1 billion, with a central estimate of ~RMB 3.8 billion. II. Comprehensive Financial Snapshot In 2025, Tianqi Lithium achieved total revenue of RMB 10.35 billion and attributable net profit of RMB 458 million—successfully turning profitable amid lithium prices plunging to the RMB 80,000/ton low. Its lithium concentrate business performed steadily, achieving annual sales of 810,000 tons at an average price of USD 821/ton and a gross margin of 53%—a level far exceeding market consensus, confirming Greenbushes Mine’s formidable profitability as one of the world’s lowest-cost hard-rock lithium mines. Entering 2026, performance exploded. Q1 attributable net profit reached RMB 1.876 billion, up 1,699% year-on-year; gross margin climbed to 62.66%, and net margin soared to 55.4%.