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China’s lithium newcomer Zijin eyes rich returns from battery demand

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BEIJING — The head of China’s Zijin

Mining Group Co Ltd said lithium prices now at

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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

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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

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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

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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.

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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

Hogue)

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