BEIJING — The head of China’s Zijin
Mining Group Co Ltd said lithium prices now at
record levels could halve by end-2025, telling the Reuters NEXT
conference however the miner would still forge ahead with heavy
investment in the sector.
The company, China’s top gold extractor and a leading
producer of copper, has already spent $16 billion buying three
lithium mines over the past year, making it one of the world’s
top 10 producers of the battery metal.
The flurry of deals comes even as warnings emerge that
lithium prices, driven to records by rapid growth in electric
vehicles, may peak next year because of a looming supply glut.
“Zijin aims to become one of the top three to five mining
companies in the world by 2030. To do that, we need a new growth
driver on top of our gold, copper and zinc sectors,” said
company president Zou Laichang.
“New energy and new materials are the key strategic path for
us to achieve this goal.”
Zijin’s recent purchases include Canada’s Neo Lithium Corp
, a company focused on lithium mining in Argentina,
bought for C$920 million ($690 million) in a deal completed in
January and giving it access to the Tres Quebradas (3Q) project.
It also bought majority stakes in the Lakkor Tso Lithium
Salar mine in China’s Tibet region and the Xiangyuan lithium
mine in Hunan province.
Zou said more investments are planned, giving no details on
how much the company was planning to spend. Zijin has a market
capitalisation of about $35 billion and net profit of 15.7
billion yuan ($2.2 billion) last year.
But competition for resources is fierce, with companies such
as Chinese battery maker Contemporary Amperex Technology Co Ltd
(CATL) and automakers BYD and Tesla
also seeking access to lithium.
Some firms are also working to develop alternative battery
materials, which could reduce lithium demand in the long term.
“Of course there are concerns … but we will take full
advantage of our technology and cost advantage to remain
competitive,” Zou said.
“We’ve been working on our lithium extraction from salt lake
brine and hard-rock deposits to bring down cost and improve
utilization rate efficiency,” he said.
A surge in supply coming onstream by 2025 is expected to
push prices down to a “normal range” of 300,000 yuan to 400,000
yuan a tonne in the second half of that year, Zou said.
That would cut as much as half from China’s current spot
lithium carbonate battery grade prices, which according to
Fastmarkets sit at a record 597,500 yuan ($83,430) a tonne,
about three times higher than they were a year ago.
China accounts for about 60% of world lithium chemical
supply and its prices are an important global benchmark. Zijin
told investors recently it made its mine acquisitions based on
lithium carbonate prices of 100,000 yuan a tonne.
There are growing headwinds for Chinese miners seeking to
invest overseas, however. Last month, Canada ordered three
Chinese companies to give up investments in lithium mines there,
citing national security.
“We will be more careful, focusing more on assessing policy
and political risks,” Zou said.
Zijin is also in a legal dispute with Australian miner AVZ
Minerals Ltd over the purchase of a 15% stake in the
Democratic Republic of Congo’s Manono project, thought to be one
of the world’s largest lithium mines.
Zijin is aiming to have 150,000 tonnes of lithium carbonate
equivalent (LCE) capacity by 2025, according to an investor
briefing on Nov.15.
That’s about half the capacity planned by major Chinese
producer Ganfeng Lithium Co. Ltd. .
Zijin is also expanding downstream and starting lithium iron
phosphate (LFP) production. Zou said about 20,000 tonnes of LFP
capacity would be launched by the end of this year.
To view the Reuters NEXT conference live on Nov. 30 and Dec.
1, please click here.
($1 = 1.3379 Canadian dollars)
($1 = 7.1462 yuan)
(Reporting by Siyi Liu and Dominique Patton in Beijing;
Additional reporting by Gao Zhuo in Hong Kong; Editing by Tom