Posted on 05 Jun 2024
Tianqi Lithium Corporation is once again calling for an extraordinary shareholder meeting after SQM signed a lithium joint venture partnership with Codelco.
The Chinese giant is SQM’s second-largest shareholder with a 22.16% equity interest. It has previously opposed the negotiations, which it claims to have been done without input from shareholders.
Following the SQM-Codelco deal announcement on 31 May, Tianqi now says it will “conduct a comprehensive assessment within the legal framework and may consider actions to ensure the protection of its shareholder interests.”
Under the agreement, SQM set concession terms with state-owned copper company Codelco, acting on behalf of the Chilean state, over two periods: 2025-2030 and 2031-2060.
Codelco will own 50% of the shares plus one. SQM will be the JV operator and is entitled to higher production and sales quotas until 2030. After that, Codelco takes operatorship.
In a filing to the Hong Kong Stock Exchange on 3 June, Tianqi warns of a series of risks arising from the deal and calls for SQM to submit the agreement to a shareholders’ meeting for consideration and approval before signing.
It says its Chilean lawyers requested the Chilean Financial Market Commission to convene such a meeting on behalf of Tianqi, asking SQM to respond by Monday. Tianqi said then it had not received any response.
Gerardo Illanes, chief financial officer of SQM, tells Kallanish the Chilean miner has not been asked to call for an extraordinary shareholder’s meeting.
“There is no plan at this point to call for an extraordinary shareholder’s meeting. The Chilean regulator (CMF) has not asked us to call for an extraordinary shareholder’s meeting nor impose us any deadline about it,” Illanes says.
“The CMF sent us a few questions we had to answer before 3 June, in regards to a request made by a shareholder to reconsider a CMF ruling issued a few months ago. If at any moment in the future we are requested to call for an extraordinary shareholder’s meeting (or if we decide to call it ourselves), it will be properly informed thru the formal channels.”
Tianqi warns SQM may not be able to continue mining lithium in the Salar de Atacama if the Codelco deal does not go ahead. This is because its mining and operational rights are due to expire in 2030 and there is a risk SQM will fail to obtain new quotas for lithium extraction.
According to Tianqi, there is a risk SQM will lose control of its core business when Codelco takes operatorship in 2031. This may affect SQM’s strategic planning and its development “due to differences in decision-making efficiency and starting points.”
The Chinese company is also concerned about its ability to participate in SQM’s corporate governance.
CMF was contacted for comment.
Source:Kallanish
