The lithium industry leader, Tianqi Lithium Corporation (SZSE: 002466, HKEX: 09696), has disclosed two significant developments concerning its Australian operations. The company announced that a localized fire occurred during maintenance at the third-stage chemical-grade lithium concentrate plant of its controlling subsidiary, Talison Lithium Pty Ltd, located in Australia. This facility, which produced its first batch of qualified chemical-grade lithium concentrate in January, is currently in a production ramp-up phase.
Separately, Tianqi Lithium Energy Australia Pty Ltd (TLEA), a joint venture between Tianqi Lithium and Australian-listed IGO Limited (ASX: IGO), is undergoing a tax review by the Australian Taxation Office. The potential tax liabilities and associated penalties involved could amount to approximately A$170 million.
In response to inquiries, Tianqi Lithium stated that there is no further information available for disclosure regarding the subsequent impact of the fire or the progress of the tax review, and all information should be based on the official announcements. The company noted that the fire's impact is still under further assessment, but operations at Talison's other producing lithium concentrate plants remain unaffected. The tax review has not yet reached a final conclusion.
Fire Incident at Overseas Project
With its A-share price closing at 64.04 yuan on June 17, Tianqi Lithium boasts a total market capitalization of 109.7 billion yuan. The company operates multiple lithium chemical product production bases globally. Talison controls the Greenbushes lithium spodumene mine, recognized as the world's largest producing lithium spodumene project with extremely low costs. As of December 31, 2025, the Greenbushes mine's total resource is estimated at 457 million tonnes with an average lithium oxide grade of 1.6%, equivalent to approximately 18 million tonnes of lithium carbonate.
The recent fire incident at Talison's third-stage chemical-grade lithium concentrate plant in Australia was reported to Tianqi Lithium on the afternoon of June 9. The localized fire, which occurred during maintenance, was promptly extinguished. All personnel on site were safely evacuated with no reported injuries. While some individual pieces of equipment were damaged, the main equipment and production lines were not affected.
Talison immediately activated its emergency response plan and initiated an investigation. At the time of the announcement, the company was assessing the losses, impacts, and repair work required due to the incident. The third-stage expansion project, which experienced the fire, was a capacity expansion initiative approved by Tianqi Lithium's board in July 2018. Located in Greenbushes, Western Australia, the project was funded by Talison's own resources. Originally slated for completion and trial production in the fourth quarter of 2020, its commissioning was later postponed to 2025. The project was finally completed and began trial operations on December 18, 2025, producing its first batch of qualified chemical-grade lithium concentrate on January 30, 2026.
Tianqi Lithium has previously stated that the chemical-grade lithium concentrate required by its domestic and international production bases is primarily sourced from the Greenbushes mine. The commissioning of Talison's third-stage project was expected to provide a continuous and sufficient supply of raw materials, enhance the efficient matching of production capacity with resources, strengthen synergy across the industry chain, and potentially improve the company's profitability. The company's announcement indicated that the fire may affect the ramp-up progress of the third-stage plant to some extent, with the specific impact to be determined after further evaluation. Operations at Talison's other producing lithium concentrate plants are unaffected.
Joint Venture Faces Tax Scrutiny
Beyond the fire, Tianqi Lithium is involved in another matter in Australia. During its 2026 half-year results conference call, IGO Limited disclosed that TLEA, its joint venture with Tianqi Lithium, is under a tax review by the Australian Taxation Office. Tianqi Lithium also disclosed related information in its 2025 financial report.
In 2021, TLEA, then a wholly-owned subsidiary of Tianqi Lithium, introduced strategic investor IGO through a capital increase and share expansion. Post-investment, Tianqi Lithium holds a 51% stake in TLEA's registered capital, while IGO's wholly-owned subsidiary, IGO Lithium Holdings Pty Ltd, holds the remaining 49%. TLEA holds two core lithium assets: a 51% stake in Windfield, the operator of the Greenbushes lithium spodumene mine, and full ownership of the Kwinana lithium hydroxide refinery.
The transaction was completed in 2021, and the Australian Taxation Office is still reviewing and assessing the potential tax implications of the deal's structure, including the implementation steps of internal restructuring. Tianqi Lithium stated that if the tax authority determines the structure does not substantially comply with the general anti-avoidance rules of Australia's Income Tax Assessment Act 1936, it could result in consequences including the inapplicability of capital gains tax exemptions for the internal restructuring-related transfer of TLA (a wholly-owned subsidiary of TLEA) shares within the same consolidated tax group, potentially leading to penalties ranging from 25% to 100% of the total tax payable, plus interest.
On August 8, 2025, Tianqi Lithium's wholly-owned subsidiary, Tianqi Lithium Holdings Pty Ltd, received a preliminary opinion letter from the Australian Taxation Office on the matter. The letter indicated, based on current information, that several different scenarios for applying anti-avoidance rules were possible, corresponding to varying tax liability amounts. The company was requested to provide feedback, including differing opinions on facts, legal application, and amount calculations, or to present other considerations for the tax office's review.
Tianqi Lithium submitted its detailed response and supporting materials in November 2025. As of the disclosure of its 2025 financial report, the company had not received further conclusive opinions from the tax authority. The financial report noted that the applicability of the various scenarios outlined in the preliminary letter depends on the tax office's further assessment of the company's submitted materials. Based on the latest independent third-party tax legal advice, the company estimates the potential total tax liability at approximately A$170 million (as indicated in the preliminary letter, excluding late payment fees and penalties). However, the company assessed the likelihood of an outflow of economic benefits to settle this obligation as not exceeding 50% and therefore has not recognized a provision for the related contingent liability. As the applicability of the scenarios is still pending further assessment, the company cannot yet evaluate the impact of this matter on its future financial position and operating results.
Tianqi Lithium also mentioned that the company, its relevant subsidiaries, IGO, and IGO Lithium signed a Tax Sharing Agreement on June 21, 2021. Under this agreement, if the tax review confirms that capital gains tax arises from the internal restructuring steps, IGO and IGO Lithium have agreed, subject to a maximum cap and specific conditions, to share the tax responsibility with Tianqi Lithium and its relevant subsidiaries based on their 49% equity stake in the joint venture. Tianqi Lithium stated it is actively communicating and negotiating with the Australian Taxation Office, cooperating with the review to minimize any potential adverse impacts.
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