When China’s Tianqi Lithium paid $4bn in 2018 to become the second-largest shareholder in Chile’s SQM, it was making a gamble to gain a strategic foothold in one of the world’s top lithium reserves as demand soared for the metal at the heart of the electric vehicle revolution.
But Tianqi’s investment to solidify its position in Latin America, home to the “lithium triangle” of Argentina, Bolivia and Chile, is in jeopardy as the Chilean government works to exert more control over the vast salt flats of the Atacama Desert, where SQM produces one-fifth of the world’s lithium.
SQM has entered a preliminary agreement to form a joint venture with state-owned copper producer Codelco, a deal that would fulfil President Gabriel Boric’s mandate that strategic lithium projects should begin as or shift to public-private partnerships. The joint venture risks diluting Tianqi’s current interests in SQM’s lithium business, and cutting it out of further possible access to the quality lithium resources.