What’s new: Zijin Mining Group Co. Ltd. (601899.SH) plans to acquire 71% of lithium mine owner Hunan Houdao Ming Co. Ltd. for 1.8 billion yuan ($269 million), the copper and gold mining giant said Wednesday.
Skyrocketing lithium prices and declining copper prices are pushing Zijin into the lithium business. Houdao Ming owns the Xiangyuan lithium mine, which has about 2.16 million tons of lithium carbonate equivalent. That makes it the 13th-largest hard rock lithium mine in the world and the third-largest in China.
The total investment in construction of the mine is estimated at 3.7 billion yuan over a two-year construction period, with 18 years of production. Based on a lithium carbonate price of 100,000 yuan a ton, the investment could be recovered in five years, industry analysts estimated.
Zijin is also partnering with the shareholders of the remining 29% of Houdao Ming to set up a new lithium smelting joint venture. Eventually, Zijin will own 66% of the Xiangyuan lithium mine and 34% of the smelting business, the company said.
The background: Global lithium prices have shot up over the past year on expectations of a boom in demand for making batteries used in electric vehicles. After eight months of gains since July 2021, the price of lithium carbonate peaked in March at 504,000 yuan per ton. In June, the price held at 470,000 yuan per ton, according to Caixin Data.
As Chinese electric-auto makers ramp up production after Covid lockdowns, industry experts forecast that lithium prices will hit new highs by the end of this year.
In contrast, copper prices are under pressure. The main copper contract on the London Metal Exchange fell about 7% between June 20 and 24, the biggest weekly decline in a year.
Zijin said in February that it would invest $380 million to build a lithium carbonate plant in Argentina after its acquisition of Canada’s Neo Lithium Corp. last year.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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