Chilean financial regulator the CMF has ruled that the proposed joint venture (JV) between Codelco and SQM, focusing on lithium production, does not require SQM shareholders' approval to proceed.

The decision clears a significant hurdle for the partnership, which aims to bolster Chile's role in the lithium market, a critical component for batteries, according to a Reuters report posted on Mining.com.

This ruling represents a blow to Tianqi Lithium, a Chinese company holding a 22% stake in SQM.

Tianqi had called for a shareholder vote on the matter.

The CMF stated that SQM's board approval was sufficient, dismissing Tianqi's arguments.

The commission, in its letter to Tianqi, said: “This commission believes that it is not appropriate for an SQM extraordinary shareholders’ meeting to decide on the so-called association agreement, thus this transaction must be analysed and resolved by SQM’s board of directors.”

However, the Chinese company publicly expressed dissatisfaction with the negotiation process between SQM and Codelco, citing a lack of transparency.

The dispute escalated into a public disagreement with SQM, and Tianqi has indicated it may pursue legal avenues to safeguard shareholder interests.

The JV is set to grant Codelco a 50% plus one share stake, significantly enhancing the state's involvement in lithium production.

This move is particularly strategic as Chile is recognised as the world's second-largest lithium producer.

The collaboration is expected to enable SQM to increase its output of lithium, a mineral essential for the burgeoning battery industry.

Last month, an agreement was signed between Codelco and SQM to jointly exploit the vast lithium deposits in the Salar de Atacama salt flat.