June 22 (NBD) -- Chinese lithium product supplier Tianqi Lithium Corp (Tianqi, 002466.SZ) responded to the inquiry letter from the Shenzhen Stock Exchange (SZSE) about its planned deal to buy stakes in Chile's lithium producer Sociedad Química y Minera de Chile (SQM).

On May 17, Tianqi agreed to buy 62.6 million Class A shares in SQM from Canada-based fertilizer company Nutrien Ltd for about 4.226 billion U.S. dollars. 

According to the announcement from the Chinese lithium producer, aside from the bank loans of 3.5 billion U.S. dollars and already-paid deposit of 325 million U.S. dollars, Tianqi still needs to pay another 401 million U.S. dollars to complete the deal.

To complete the deal, Tianqi has been considering raising money through debt financing as well as equity financing. The company is seeking for the initial public offering in Hong Kong so as to repay the bank loans and reduce assets liabilities ratio.

The deal is expected to expand Tianqi's presence in the global lithium market. Tianqi now is the controlling shareholder of the world's largest primary lithium producer Talison Lithium Inc. 

However, the deal also raised concerns over monopoly.

Chile's National Economic Prosecutor's Office announced on June 15 that it had launched an investigation into the effects that Tianqui's acquisition of SQM can cause to the market, alleging a potential fusion between the two lithium giants would distort the global lithium market.

Email: zhanglingxiao@nbd.com.cn