China’s lithium-related
companies went on a shopping spree in worldwide markets throughout 2017,
purchasing or investing otherwise in overseas lithium enterprises. Especially
lithium mines have been the main target for Chinese investment of Chinese
downstream industry, including manufacturers of batteries, alternative energy
vehicles, and other lithium-depending high-technology products.
As
demand for alternative energy vehicles (AEV) surges, Chinese companies have
been doing deals around the world to secure supplies of lithium, a
silvery-white metal mined from rocks mainly in Australia and brine pools in
South America. The companies are supported by the government, as China has
limited lithium resources of its own, so investments abroad are inevitable.
The
rush of Chinese firms for worldwide lithium mines is backed up by the news that
the Chinese government has recently announced China had started exploring banning
the production of petroleum-fueled cars. It has not yet revealed, when the
country would implement the ban, but Looking at the rapid growth of China’s
electric cars market and similar plans in the UK and France, market experts are
estimating the ban to be possible between 2030 and 2040.
According
to market intelligence firm CCM, the investing companies can be categorized
into three segments, each of which has specific goals for the investment and
the business. The first categories are manufacturers of lithium products,
including companies like Jiangxi Ganfeng and Sichuan Yahua. The second group
are companies that are involved in the production of lithium-ion batteries or
alternative energy vehicles, where the new energy giant BYD is to mention. The
last group are mining enterprises, which want to exchange their industrial
change and competitiveness.
The
AEV industry is the largest consumer of lithium in China, as the country has
more electric vehicles on its roads than any other country. Furthermore, the
country’s lithium-ion battery companies control an estimated 25% of
the global supply. Those companies need lithium to continue their production,
and questions persist about where it will come from.
In
general, the Chinese enterprises aim to acquire adequate raw material, reduce
the purchase cost of those, enhance their product profitability and increase
resource reserves. Furthermore, these companies are aiming to lay a foundation
for their layout of industrial chain and to expand their business by
integrating resources.
However,
not all of the purchases and investments in recent years turned out to be a
success. In some cases, the lithium mines could not provide the high-grade
materials that the investors were hoping for, which caused resignation and the
sales of unprofitable mines.
Several recent
investments
Canada’s
Potash Corp., the world’s largest producer of the fertilizer by capacity,
confirmed rumours pointing at Chinese firms hoping to buy the miner’s stake in
Chilean lithium producer SQM.
Chinese
investment firm NextView Capital has paid USD41.4 million for a 20% stake in
AIM-listed lithium producer Bacanora Minerals. The Beijing-based company will
get guaranteed supply of 5,000 tonnes per year of battery metal lithium at
market prices from Bacanora’s project in Mexico when it starts production at the
end of 2019.
Great
Wall Motor, China’s largest producer of SUVs, will pay USD22 million for a 3.5%
stake in Pilbara Minerals. Under the agreement, Great Wall will buy 75,000
metric tons per year of lithium-ion battery-grade lithium carbonate for the next
five years.
Following
China Molybdenum’s USD1.5 billion purchase of Anglo American’s phosphate and
niobium unit, Jilin Jien Nickel Industry Co has had its proposed purchase of RB
Energy’s Quebec lithium development approved by a Canadian court.
CCM
holds that the enthusiasm for purchasing lithium mines abroad will go on in the
future. With less high-quality mines, it is harder to buy. Enterprises in any
fields are supposed to have abundant capitals, bright prospect and complete
management if they want to invest in lithium mines.
About CCM
CCM
is China’s leading market intelligence provider for the fields of agriculture,
chemicals, and food & feed.
If
you need more information on China’s lithium, lithium-ion battery, and AEV
market, please have a look at CCM’s monthly published Newsletter China Li-ion
Battery E-News to get premium insights in market dynamics, policy changes,
company developments, and any newsworthy stories of the market.
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