REUTERS -- A Chilean court on Thursday suspended the sale of a coveted stake in lithium producer SQM SQMa.SN, SQM_pb.SN to China's Tianqi Lithium Corp 002466.SZ, saying it will consider a lawsuit filed by the Chilean company's controlling shareholders, who oppose the deal.
The lawsuit, filed on Wednesday, alleges a previous anti-trust court decision did not give shareholders adequate time to review the agreement between Tianqi and regulators, allowing the Chinese miner to purchase a 24 percent stake in the world's No. 2 producer of lithium, a metal used to make batteries for electric vehicles.
The agreement is intended to limit the exchange of commercially sensitive information between Tianqi and SQM, though detractors say it does not go far enough. It would give Tianqi the right to have at least three of the company's eight board seats, fueling concerns that Tianqi would have access to internal SQM documents that it would then use to its own advantage.
Pampa Calichera CALa.SN, Potasios de Chile POTASa.SN and Global Mining - which together control a majority stake in SQM - asked Chile's constitutional court on Wednesday to "urgently suspend" the agreement, saying the anti-trust court had approved it last week "practically in secret."
The shareholders, known collectively as the Pampa Group, are controlled by SQM's former chairman, Julio Ponce, who has been a driving force behind SQM since it was privatized in the 1980s under his former father-in-law, dictator Augusto Pinochet.
Tianqi said in a statement that the court's decision to review the appeal was "purely a formality."
"What comes now is a discussion about the admissibility of the lawsuit, in which we will put forward solid arguments to see the suit thrown out," Tianqi said.
The constitutional court said it would hear arguments in the case on Oct. 22.
SQM has long objected to the deal on the grounds it did not go far enough to limit Tianqi's access to corporate secrets and sensitive information.
Chile's previous government had also tried to block the Tianqi deal before it left office in March, amid concerns a tie-up would give the Chinese company control of 70 percent of the global lithium market and unprecedented pricing power.
Tianqi, through Talison Lithium which it controls, is also in a joint venture with No. 1 lithium producer Albemarle Corp ALB.N in Australia, where they own the world's biggest lithium mine, Greenbushes.
Beijing is aggressively promoting electric vehicles to combat air pollution and help China's domestic carmakers leapfrog the combustion engine to build global brands.
The agreement between Chile's antitrust regulator and Tianqi stipulates that the Chinese miner cannot name any of its executives or employees to SQM's board, and requires it notify regulators of any future, lithium-related deal struck with either SQM or Albemarle.
Chile's antitrust regulator launched its investigation in June, shortly after Tianqi said it would buy the stake in SQM for $4.1 billion.