Lithium Power International Ltd (fka LTHHF)

[Dr_Vonschellan]

Tianqi's_proposed US$4_Billion investment in_Chile
https://www.latercera.com/pulso-pm/noticia/tianqi-presenta-un-plan-de-us-4-mil-millones-para-productos-de-litio-en-chile-pero-depende-de-factores-exogenos-a-la-compania/XDXG3PISYZEARAW5NYB4EQM6VE/
For English see below.

Tianqi clearly has some major new serious plans for Chilean lithium.

The Doctor
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Tianqi presents a US$4 billion plan for lithium products in Chile, but it depends "on factors exogenous to the company"

The Chinese giant, a shareholder of SQM, exposed a program that includes building lithium battery plants. He exposed him to the National Economic Prosecutor's Office, which refused to lift restrictions on his participation in SQM, and to CORFO authorities. "A key factor for the execution of each plan will be the supply of lithium raw materials by the relevant Chilean authorities," he said. China also revealed an agreement with SQM for the supply of 20,000 tons per year.

"Under strict confidentiality, we have come to make a brief review regarding the preliminary Investment Plan that Tianqi has informed us that it plans to develop in Chile in the short and medium term." This is what the Chilean lawyers for Tianqi Lithium Corporation, Luis Alberto Aninat and Cristián Reyes, wrote in a presentation filed with the National Economic Prosecutor's Office on January 10 of this year, which was part of a request from the Chinese company to request the lifting of the restrictions on its participation in the corporate governance of SQM, where it has 23%, agreed with the National Economic Prosecutor's Office (FNE) in 2018. On March 3, the FNE rejected the request.

For the antitrust body, Tianqi has not proven that there is a "significant" change in the circumstances that founded the agreement. In his opinion, the risks detected four years ago have not changed "substantially" and it is reasonable to foresee that they will not as long as Tianqi's shareholding in SQM is maintained. Faced with the setback, the Asian company filed a replacement document with the FNE, which should be resolved in the coming days. And although the FNE will most likely maintain its position, Tianqi is therefore considering going directly to the Free Competition Defense Court (TDLC) to lift the restrictions, which prevent it, among other things, from nominating Tianqi executives in the SQM directory.

Tianqi has a stake in SQM, the largest local producer of lithium carbonate and lithium hydroxide, but wants to expand its presence in Chile. In the five-page text, to which Pulso had access, Tianqi only explained that it not only seeks to fully exercise its rights as a SQM shareholder, but also to formalize its intention to enter other relevant markets, different from that of the extraction of lithium hydroxide carbonate in its different grades.

“Tianqi plans to build the necessary infrastructure to generate in the country the necessary supplies for the manufacture of green lithium ion batteries and with this, install in Chile all the links of the value chain associated with its production, which includes mining, lithium conversion plants and cathode materials for the production of battery cells,” the presentation says.

According to the presentation, Tanqi's investment plan includes three stages with a total investment of US$4,000. millions.

In a first phase called “Up-stream”, the company seeks to produce lithium chemicals (Li2CO3/LiOH/Li-metal). It requires an investment of US$1,000 million and its success is contingent on the supply of brine.

In this same value chain, later, with an investment of US$1,000 million, it intends to produce "cathode material", for which it considers a capacity of 100,000 mtpa (metric Tons per Year).

Finally, in a third stage, called "down-stream", Tianqi estimates that it will produce "battery cells" with a capacity of 20 GWH and with an investment of US$2,000 million.

In his presentation, the Chinese company highlighted its "long and proven" track record of efficient operation in the lithium market, being a leader and with an established and reliable customer base. In addition, he assured that he is a strategic partner in the supply chain of many key OEMs (Original Equipment Manufacturers) for the development of batteries and electric vehicles around the world. Likewise, he highlighted that it is a socially responsible company and fully committed to sustainable development with high environmental, social and governance standards.
“Exogenous factors”

Tianqi detailed to the FNE the main products that it plans to produce in Chile as a result of its investment plan that it intends to implement, together with some of the expected results.

To produce lithium chemicals, based on a price of US$78,000 a ton registered in November 2022, with a capacity of 40,000 tons, it projects revenues of US$3,200 million and the creation of 500 jobs. In the case of cathode material, Tianqi expects revenues of US$5 billion, with a price of US$50,000 a tonne and a capacity of 100,000 mtpa. In the production of battery cells, and a price of US$130 per kilowatt/hour, it calculates revenues of US$2.6 billion and 1,500 jobs.

The Chinese giant affirms that it intends to implement these plans as soon as possible, but specifies that "they depend on factors exogenous to the company, since a key factor for the execution of each plan will be the supply of lithium raw materials by the pertinent Chilean authorities”.

In this sense, Tianqi added in his presentation to the FNE that he presented "this same Investment Plan to CORFO and requested its intervention and intermediation to coordinate and supply the raw materials required for this purpose, within the framework of the supply contracts that maintains with Albemarle and SQM and that contemplate specific conditions regarding the price for specialized producers of Value Added products in Chile, without said public service having communicated any decision in this regard to date”.

"Because of this, the Prosecutor's Office will be able to appreciate the potential entry of Tianqi in the Lithium Derivatives Market and the investment plan associated with it, in no way intends to make our client intervene in business activities that could compete or rival SQM, whose focus is on the extraction and development of technologies related to said process”, concluded the company.
Agreement with SQM

Tianqi has a minimum supply agreed with SQM. On November 19, 2021, via email, lawyer Claudio Lizana, Carey's former partner and Tianqi advisor at the time, sent an email to the FNE in which he detailed a production agreement between SQM and the Chinese mining company. .

The letter of intent signed by both companies, and attached to the process initiated at the FNE, explains that the agreement guarantees Tianqi the supply of industrial grade lithium carbonate for 20,000 metric tons per year (MT) from 2023 to the end of 2030.

The agreement established that by 2022 it considered only 10,000 metric tons: 1,000 in the first quarter; 1,500 in the second quarter; 2,500 in the third quarter and 5,000 in the fourth quarter. Both parties agreed to establish a price and commercial conditions at market price.

The agreement also provides for the formation of a non-fully functional joint venture for the development of a lithium carbonate refining plant in China. Its purpose is the refining of 20,000 metric tons per year of battery grade lithium carbonate. All its production will be supplied to its parent companies or members of its business group: that is, it will not have activities facing the market and its ownership will be shared: Tianqi Lithium (50%) and SQM (50%).

The end-2021 agreement was signed by Ricardo Ramos, general manager of SQM, and Fran Ha, president and CEO of Tianqi. In 2022, SQM sold a total of 157 thousand metric tons of lithium carbonate.