After losing a court battle in the South American nation, the lithium miner has announced plans to offload part of its local holdings ahead of the metal’s next market cycle
Key Takeaways:
- Tianqi tried in court, but failed, to challenge recent nationalization measures that undercut SQM, its partly-owned miner of the world’s largest lithium salt flat
- The company concurrently announced an equity placement and convertible note offering to raise about HK$5.8 billion
By Lee Shih Ta
Rewind to 2018, when industry watchers saw Tianqi Lithium Corp.’s (9696.HK; 002466.SZ) $4.1 billion acquisition of nearly 24% of Chile’s Sociedad Química y Minera (SQM) as a masterstroke in the miner’s ambitions to carve out a dominant spot in the global lithium supply chain.
Chile is the world’s second-largest producer of lithium, supplying 30% of global output for the critical element in batteries used to power everything from smartphones to electric vehicles (EVs). SQM accounts for over 20% of the global lithium chemicals market. One in five EVs runs on SQM-sourced lithium carbonate from SQM’s crown jewel: the 820-square-kilometer Salar de Atacama complex, the largest lithium-bearing flat on Earth.
SQM represented a critical supply chain stronghold for Tianqi. More than a simple financial move, Tianqi saw its mammoth investment as a decisive bid to control a vital mineral resource as global demand for lithium batteries was soaring.
Crumbling calculus
But just five years after its coup, that calculus crumbled in April 2023. That’s when Chilean President Gabriel Boric Font unveiled Chile’s “National Lithium Strategy,” laying out a framework for future lithium development through joint ventures led by state entities working with private companies. State copper colossus Codelco was later tasked with restructuring industry assets, culminating in a deal that will forfeit SQM’s control of the Salar de Atacama complex by 2031.
Tianqi didn’t take the major policy change lightly, and its Chilean venture challenged it in court. But the Supreme Court’s final dismissal of its challenge on Jan. 27 left Tianqi without a voice in the matter. In effect, the company’s massive multibillion-dollar investment became a rapidly hollowing shell.
A week later, on Feb. 4, Tianqi proposed selling up to about 3.57 million of its SQM Class A shares, representing about 1.25% of SQM’s equity, triggering a one-day trading halt for the stock before a resumption the next day. No buyers were announced for the stake being sold, signaling most likely that none had been found.
The stake’s value is pegged at around $206 million, hinting at a slight decline from the $216 million that Tianqi paid for the equivalent shares in its original investment. Management framed the sale as strategically freeing up capital for use elsewhere.
New fundraising
Concurrent with its SQM sell-down, Tianqi also unveiled a separate fundraising initiative from a major share placement and convertible bond offer. The company said it planned to place about 65 million new Hong Kong-traded H-shares at a 9% discount, while also issuing 2.6 billion yuan ($376 million) worth of convertible bonds. The two moves will raise about HK$5.8 billion ($836 million). The company said it will use the funds for lithium resource acquisitions, capacity-building investments, and to replenish its increasingly tight working capital.
Combined with the anticipated $206 million from the SQM stake sale, the company should raise roughly $1.04 billion in fresh funds.
Tianqi’s finances are hardly in dire straits. Its third-quarter 2025 report showed it had about 6.49 billion yuan in cash at the end of last September, up slightly year-over-year. Adding another 1.53 billion yuan worth of financial assets held for trading on its balance sheet brings the company’s total liquid resources to around 8 billion yuan, indicating it isn’t facing any immediate liquidity crisis.
That said, Tianqi’s net cash flow from operating activities plunged nearly 50% year-over-year to 2.19 billion yuan in the first nine months of last year, signaling a significant weakening in its ability to generate cash for internal use. Concurrently, its non-current liabilities rose by over 3.6 billion yuan from a year earlier, reaching 18.09 billion yuan. Meanwhile, construction-in-progress costs surged roughly 56% annually to 8.04 billion yuan, reflecting accelerating investment in mine development and lithium hydroxide production lines.
At the end of last September, the company’s total assets stood at 73.96 billion yuan, against total liabilities of 22.56 billion yuan, yielding a debt-to-asset ratio of 30.5%. This is notably low for the capital-intensive lithium mining sector, which typically requires heavy asset investment.
Tianqi Lithium has pursued a strategy of pursuing lithium mining assets globally. Its wholly owned Talison Lithium subsidiary holds the Greenbushes lithium spodumene mine in Australia. Combined with its interests in SQM and the Zabuye salt lake mine in the Shigatse area of Tibet, the company has a portfolio of high-quality domestic and international lithium brine resources to keep it well supplied with lithium raw materials.
But Tianqi also operates in an area hit by recent wild price swings, resulting in a massive 7.91 billion yuan net loss for the company in 2024, the largest it has ever reported. As its situation deteriorated with crashing lithium prices, its Hong Kong shares plummeted nearly 80% from a 2022 peak of HK$88.05 to a low of HK$18.64. Conditions improved as prices stabilized and began to rebound last year. The company forecast its full-year profit for 2025 would range between 369 million and 553 million yuan, and its stock price has rallied about 89% over the past 12 months.
This new series of fundraising steps suggests that Tianqi aims to proactively restructure its capital base and resource allocation during its rebound, positioning itself for the next industry cycle. By accelerating its investments in mine development and lithium hydroxide production lines, it is seeking to convert its difficult experience from the past two years into a valuable advantage it can use to lessen the impact from similar future downturns.
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