Shares in China’s Tianqi Lithium hit their lowest level in a year on Friday, after its $4.1bn deal to buy a 24 per cent stake in rival SQM was halted due to a lawsuit by the Chilean company’s largest shareholder. Chile’s constitutional court suspended the purchase on Thursday following a lawsuit filed by Julio Ponce Lerou, the former son-in-law of Chile’s former dictator Augusto Pinochet, who owns 30 per cent of SQM. The deal is being closely watched by global carmakers since it will unite two of the largest producers of lithium, just as demand is set to surge due to growing sales of electric cars. The lithium market is already heavily concentrated, and dominated by just five companies: SQM, Albemarle, Tianqi, Ganfeng Lithium, and Livent. Tianqi’s purchase has raised concerns in Chile about its impact on competition in the lithium market. Earlier this month Chilean antitrust authorities reached an agreement with Tianqi that placed conditions on the sharing of confidential information with SQM following completion of the deal. But Mr Lerou and SQM are opposed to that settlement. “In SQM’s opinion, the measures of the agreement do not effectively resolve the risks that are intended to be mitigated, and are not properly structured to prevent the access to sensitive information, which along with harming SQM, could also harm the market,” SQM said this week. Tianqi said it was confident Mr Lerou’s lawsuit would be thrown out by Chile’s constitutional court, however. “What comes next is the discussion regarding the admissibility of the lawsuit, and we will provide the court with solid legal arguments so it can be thrown out of court,” the company said. “We’re very confident that will be the case.” Shares in Tianqi fell by 20 per cent this week to close at Rmb29.7 in Shenzhen on Friday, after touching its lowest level in a year at Rmb28.21 earlier in the day.
AJM Price at posting:
23.0¢ Sentiment: Buy Disclosure: Held
