(Bloomberg) -- Tianqi Lithium Corp. is weighing legal options after Chile’s securities regulator snubbed the Chinese firm’s request to seek shareholder approval for a deal that would see a state-owned company take control of a sprawling lithium operation. 

In a statement distributed in Chile on Friday, Tianqi slammed the regulator’s decision over a planned tie-up between SQM and Codelco, saying the rationale behind letting it proceed without a vote weakens investor confidence in the Chilean regulatory framework.

In a rare public criticism of authorities by a Chinese firm, Tianqi is looking to assert its rights as a 22% shareholder in SQM and as an international investor. Growing tensions between SQM and its second-largest shareholder are creating an additional obstacle to Chilean President Gabriel Boric’s new public-private model for the lithium industry.

At stake is a deal that would allow SQM to ramp up production of the key ingredient in electric-vehicle batteries. Without it, SQM may have to wind down mining operations when its current contract expires in 2030.

SQM and Tianqi have questioned each other’s true motivations in the spat. Tianqi’s frustrations appear to be anchored in boardroom restrictions it has endured as a condition of its purchase of the SQM stake six years ago for $4 billion. Formally known as Soc. Quimica & Minera de Chile SA, SQM is the world’s No. 2 lithium producer. Its top shareholder is Julio Ponce, the former son-in-law of dictator Augusto Pinochet.

In comments circulated locally on Friday, Tianqi said the regulator’s determination that the deal doesn’t constitute a divestment “openly contradicts the spirit of the law that seeks to protect investors.” The approach compromises transparency and equity in corporate operations, it wrote.

Under terms of the deal announced May 31, SQM will relinquish a majority stake in its prized Atacama salt flat mine to Codelco in exchange for three more decades of operations. The tie-up is part of Boric’s agenda to have more state control in key assets of the battery metal while boosting output in the shift away from fossil fuels.

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