SANTIAGO, June 18 (Reuters) - Chile's state-run Codelco

and lithium miner SQM can form a partnership without a

vote by SQM shareholders, Chile's financial regulator said on

Tuesday, clearing the way for the deal that had been challenged

by SQM shareholder Tianqi Lithium.

Copper giant Codelco and SQM plan to

form a joint venture

that will give the state a key role in producing lithium

while letting SQM boost output.

However, China-based Tianqi, which holds about 22% of

SQM shares, repeatedly called for a vote by all shareholders,

not just the SQM board of directors, and decried a lack of

transparency in the negotiations with Codelco.

The Financial Market Commission (CMF) said arguments

submitted by Tianqi did not have merit under Chile's financial

regulations.

"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

analyzed and resolved by SQM's Board of Directors," the

commission said in a letter to Tianqi.

Tianqi did not immediately respond to a request for

comment. The company can appeal the CMF decision to the courts.