The Lithium Hunt is on

Chinese companies are searching the world’s mines for lithium and other minerals that make up the minerals required for Lithium-Ion batteries used in electric vehicles.

China’s ambition is to lead the world in the production and use of new energy vehicles (ie Electric vehicles). The Chinese government is anxious for world lithium control of the core technology of electric batteries – as well as the most crucial parts of the supply chain – to be in Chinese hands, driven in equal parts by technological nationalism and a pragmatic concern to keep dependence on foreign suppliers to the minimum.

“Over the past couple of years, we have seen evidence in the automotive industry where Chinese companies have been acquiring foreign assets across both original equipment manufacturing (OEM), components as well as mining,” said JPMorgan Chase & Co’s analyst Nick Lai.

“Our view is that vertical integration in the auto industry is not unusual. Many global OEMs have investments or equity stakes in key components.”

For example, China Molybdenum, paid US$2.65 billion in 2016 for the Tenke Fungurume Mine in the Democratic Republic of Congo, one of the world’s largest known reserves of copper and cobalt resources.

The latest such asset acquirer was Tianqi Lithium, based in the Sichuan provincial capital of Chengdu, which paid US$4.1 billion in May to buy 24 per cent of Chile’s Sociedad Química y Minera (SQM), the world’s second-biggest producer of lithium.

 

The trend continues. Jiangxi Ganfeng Lithium, one of China’s largest producers of the battery metal, is seeking a US$1 billion initial public offering (IPO) in Hong Kong to raise funds toward the development of a mining project in Argentina.

“Grabbing key resource mining assets overseas is key for lowering the prices of raw materials domestically,” said a 2014 report by China’s top think tank the Chinese Academy of Social Sciences.

“However, because of the complexity of some of the projects, some Chinese companies saw delay, default and loss-making of these projects.”

Many overseas investment projects have failed due to “harsh climate, poor infrastructure, scarce workforce, foreign temporary worker limitations and regulatory requirements,”.

This is why “stable government with good infrastructure and lithium grade” remains the priority.

Source:http://www.scmp.com/business/china-business/article/2153153/chinas-firms-are-scouring-world-mineral-ores-pursuit-nations

Lithium News – The Lithium Hunt is on

 

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