Ganfeng joins China Minmetals lithium salt lake project for $225mn

Ganfeng Lithium Co said on Monday it would pay 1.47 billion yuan ($225 million) to take a 49% stake in a lithium salt lake project operated by compatriot China Minmetals Corp in Qinghai.

The move will give Ganfeng, one of the world's top producers of lithium chemicals used in electric vehicle (EV) batteries, its first salt lake asset in China, adding to interests it holds in Argentina.

Salt brines are one of the world's major sources of lithium, the other being the lithium-bearing mineral spodumene.

Ganfeng and subsidiary Qinghai Liangcheng Mining Co will acquire investment fund Yili Hongda, a filing to the Shenzhen Stock Exchange said.

Yili Hongda, majority-owned by Citic Securities, holds a 49% stake in Minmetals' Yiliping salt lake project in Qaidam Basin in the high-altitude province of Qinghai on the Tibetan Plateau.

The project uses the salt lake's brines to make battery chemical lithium carbonate, as well as potassium chloride, said the filing, which added the transaction would require regulatory approvals and that state-owned Minmetals would retain the mining rights.

Ganfeng's move for the stake comes amid a 60% jump in lithium carbonate prices in 2021 to a 2-1/2-year high of 84,000 yuan per tonne on resurgent demand from the EV sector after a three-year downturn.

The acquisition "is conducive to the company's business development, improves its core competitiveness and conforms to (its) upstream and downstream integration," Ganfeng said.

Ganfeng, which also has interests in Australia, Mexico and Ireland, currently has only one upstream lithium asset in China - a spodumene mining project in its home province of Jiangxi, according to its website.