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China’s lithium newcomer Zijin eyes wealthy returns from battery demand By Reuters

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© Reuters. FILE PHOTO: The corporate emblem of Zijin Mining Group Co Ltd, China’s greatest listed gold producer, is displayed at a information convention following its annual leads to Hong Kong, China March 29, 2016. REUTERS/Bobby Yip/File Photograph

By Siyi Liu and Dominique Patton

BEIJING (Reuters) – The pinnacle of China’s Zijin Mining Group Co Ltd stated lithium costs now at report ranges might halve by end-2025, telling the Reuters NEXT convention nonetheless the miner would nonetheless forge forward with heavy funding within the sector.

The corporate, China’s prime gold extractor and a number one producer of , has already spent $16 billion shopping for three lithium mines over the previous 12 months, making it one of many world’s prime 10 producers of the battery metallic. The flurry of offers comes at the same time as warnings emerge that lithium costs, pushed to data by speedy progress in electrical automobiles, could peak subsequent 12 months due to a looming provide glut.

“Zijin goals to change into one of many prime three to 5 mining corporations on this planet by 2030. To try this, we want a brand new progress driver on prime of our gold, copper and zinc sectors,” stated firm president Zou Laichang.

“New vitality and new supplies are the important thing strategic path for us to attain this purpose.”

Zijin’s current purchases embody Canada’s Neo Lithium Corp, an organization targeted on lithium mining in Argentina, purchased for C$920 million ($690 million) in a deal accomplished in January and giving it entry to the Tres Quebradas (3Q) challenge.

It additionally purchased majority stakes within the Lakkor Tso Lithium Salar mine in China’s Tibet area and the Xiangyuan lithium mine in Hunan province.

Zou stated extra investments are deliberate, giving no particulars on how a lot the corporate was planning to spend. Zijin has a market capitalisation of about $35 billion and web revenue of 15.7 billion yuan ($2.2 billion) final 12 months.

However competitors for assets is fierce, with corporations corresponding to Chinese language battery maker Modern Amperex Know-how Co Ltd (CATL) and automakers BYD and Tesla (NASDAQ:) additionally searching for entry to lithium.

Some companies are additionally working to develop various battery supplies, which might cut back lithium demand in the long run.

“In fact there are considerations … however we’ll take full benefit of our expertise and price benefit to stay aggressive,” Zou stated.

“We have been engaged on our lithium extraction from salt lake brine and hard-rock deposits to carry down price and enhance utilisation charge effectivity,” he stated.

A surge in provide coming onstream by 2025 is anticipated to push costs all the way down to a “regular vary” of 300,000 yuan to 400,000 yuan a tonne within the second half of that 12 months, Zou stated.

That might reduce as a lot as half from China’s present spot lithium carbonate battery grade costs, which in keeping with Fastmarkets sit at a report 597,500 yuan ($83,430) a tonne, about thrice increased than they had been a 12 months in the past.

China accounts for about 60% of world lithium chemical provide and its costs are an essential international benchmark. Zijin informed traders just lately it made its mine acquisitions based mostly on lithium carbonate costs of 100,000 yuan a tonne.

There are rising headwinds for Chinese language miners searching for to take a position abroad, nonetheless. Final month, Canada ordered three Chinese language corporations to surrender investments in lithium mines there, citing nationwide safety.

“We will probably be extra cautious, focusing extra on assessing coverage and political dangers,” Zou stated.

Zijin can be in a authorized dispute with Australian miner AVZ Minerals Ltd over the acquisition of a 15% stake within the Democratic Republic of Congo’s Manono challenge, regarded as one of many world’s largest lithium mines.

Zijin is aiming to have 150,000 tonnes of lithium carbonate equal (LCE) capability by 2025, in keeping with an investor briefing on Nov.15.

That is about half the capability deliberate by main Chinese language producer Ganfeng Lithium Co. Ltd..

Zijin can be increasing downstream and beginning lithium iron phosphate (LFP) manufacturing. Zou stated about 20,000 tonnes of LFP capability could be launched by the top of this 12 months.

To view the Reuters NEXT convention dwell on Nov. 30 and Dec. 1, please click on right here.

($1 = 1.3379 Canadian {dollars})

($1 = 7.1462 yuan)

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