SANTIAGO, December 30th (Argus) - Despite legal challenges from the second-largest shareholder of SQM, the Chilean mining company SQM and the Chilean state copper company Codelco have officially merged their lithium subsidiaries.
SQM and the Chilean state copper company (Codelco) established Chile's first lithium miner, Nova Andino Litio, based on the Chilean national lithium strategy. This was a major strategy of the outgoing Chilean president Gabriel Boric's government.
SQM and the Chilean state copper company (Codelco) each hold 50% of the shares of the subsidiary NovaAndino Litio, meaning that starting from January 2031, Codelco will control the operation of Chile's largest brownfield lithium resource - the Atacama salt lake. Before that, SQM will continue to control it.
As the joint venture is to be established by 2025, SQM obtained a total quota of 3 million tons of lithium carbonate equivalent (LCE) by 2030, and its extraction quota will increase to 1.65 million tons of LCE before the expiration of the current mining lease.
From 2031 to 2060, NovaAndino's quota will increase to 2.5 million tons of LCE, with an average production of 330,000 tons per year.
The Chilean government stated that starting from 2031, the Chilean government will obtain 85% of the operating profit margin of the project, an increase of 15% from the 70% in 2030. The Chilean government will obtain its share through taxes, Codelco's profits, and payments to the Chilean economic development agency. The Chilean economic development agency owns the land where the SQM project is located, and the NovaAndino project will soon belong to it.
Maximo Pacheco, the CEO of Codelco, will also serve as the president of NovaAndino for the next two years. He will resign from his position at Codelco at the end of May. Ricardo Ramos, the CEO of SQM, will serve as the vice president of the joint venture.
Tianqi Lithium's response
The second-largest shareholder of SQM, Tianqi Lithium, once again reiterated its legal dispute with the joint venture to the Chilean Supreme Court.
After the establishment of NovaAndino, Tianqi's lawyers urged the court to suspend the implementation of the project, and the verdict on their legal challenge is still pending. They argued that the joint venture has now entered the execution stage and may become irreversible before the judge makes a ruling on Tianqi.
Tianqi Lithium acknowledges that the court rejected its request to suspend the transaction, as there was nothing to suspend at that time, as the joint venture had not yet been established.
Tianqi Lithium now claims that the SQM-Codelco agreement has been approved and will enter the implementation stage. Codelco stated that it expects to sign the final documents in the coming days, and the board has appointed, and Tianqi has no direct representation.
Tianqi Lithium, which holds 22.1% of SQM's shares, opposes this cooperation being approved solely by the SQM board in private, rather than through a special shareholders' meeting. Tianqi Lithium claims that Chilean company law requires the convening of a special shareholders' meeting.
Its dispute depends on whether the Chilean financial market regulatory authority CMF approves the joint venture. It claims that the execution method of the approval process of the joint venture violates the framework of CMF's own company law.
Tianqi Lithium claims that under the framework of the Atacama salt lake joint venture, SQM will no longer control its "core lithium business" in the region, which may affect its investment returns and dividends. The company stated that it had "lost the right to access key information of the partnership, lost the possibility to vote on the partnership at the shareholders' meeting, and ultimately lost the legal-recognized right to exit." There is no indication that the Supreme Court will freeze or postpone this transaction, as Tianqi has lost lawsuits in several different courts.
