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Zijin Mining is in talks to acquire a controlling stake in lithium producer Zangge Mining as one of China’s most globally expansive miners seeks to expand its push into the critical metal.
The company has been in discussions with Tibet Zangge Venture Capital, a major shareholder in Zangge, according to a Hong Kong stock exchange filing on Friday.
It said the “potential acquisition is still subject to the approval of the board of directors” as well as the “formal signing of an acquisition agreement”.
Zangge, which has a market capitalisation of Rmb46.6bn ($6.4bn), is based in the western province of Qinghai, where salt lakes allow for low-cost extraction of minerals. It also produces potash, a potassium compound used as fertiliser.
State-backed Zijin, one of China’s biggest gold and copper miners, is well-known to international investors on the back of a wave of global acquisitions and aims to start producing lithium from a mine in the Democratic Republic of Congo next year.
Its domestic and international explorations for the metal, which plays a crucial role in batteries for electric vehicles but has recently fallen sharply in price, comes as Chinese businesses continue to establish a dominant foothold across supply chains related to the fast-growing EV battery sector.
Carmakers such as BYD and Nio have accelerated their international plans, with outbound investment surging last year on the back of the clean energy sector’s growing overseas presence.
Investment has extended from South America to Europe, where Chinese battery producer CATL last month said it would build a €4.1bn lithium battery factory in Spain alongside carmaker Stellantis.
Prices of lithium carbonate surged in 2021 and 2022 but have since fallen to about $10,000 a tonne, close to levels prior to the boom, amid concerns around excessive capacity.
Albemarle, the world’s largest lithium producer, said in November it was not economically viable to pivot supply of lithium to the west because of low prices and high operating costs.
In a separate statement to the Shenzhen stock exchange, where it is listed, Zangge pointed to a potential “change in control”. Trading in its shares were suspended on Friday. Shares of Zijin rose 3.4 per cent in early trading.
In November, Zijin acquired a gold mine in Peru and in 2019 bought Canadian miner Continental for $1bn as part of industry consolidation. A year earlier, it bought Canadian copper miner Nevsun Resources for $1.4bn and has expanded its copper operations in Africa.
Additional reporting by Wang Xueqiao in Shanghai
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