China lithium major Ganfeng expands into upstream resources overseas

China's Ganfeng Lithium Co. Ltd. said Dec. 2 that it has paid the first tranche of $39 million under a deal to acquire a 50% equity in a special purpose vehicle that controls a potentially large-scale spodumene project in Mali, a move that will enhance its overseas reach in the upstream sector.

This move will ensure a stable supply of raw materials and help lower costs for the company at a time of huge demand rush seen in the electric vehicle space and skyrocketing prices in China, market sources said.

The Goulamina spodumene project in Mali has a current mining capacity of 2.3 million mt/year.

The deal dates back to June when GFL International Co. Ltd., a subsidiary of Ganfeng, said it signed a preliminary agreement to acquire the 50% stake in a Netherlands-based SPV for $130 million. The $39 million transaction is the first payment under the agreement.

After the completion of the entire transaction, GFL International and Australian miner Firefinch Ltd. will each hold a 50% stake in the SPV. The SPV is created by a Firefinch subsidiary that will hold full ownership of the Goulamina spodumene project.

Firefinch is making an updated definitive feasibility study and mulling the expansion of Goulamina as part of the phase two plans, which will increase mining capacity of the project to 4 million mt/year, up 75% from its current capacity, Ganfeng said.

As a result, spodumene capacity of the Goulamina project can be ramped up to about 450,000 mt/year, it added.

Ganfeng's lithium interests

Ganfeng has a battery-grade lithium carbonate and hydroxide capacity of 43,000 mt/year and 81,000 mt/year, respectively, according to its interim report released in November.

The company is one of the largest lithium salts producers of China and has stepped up its investment in raw materials such as brine and spodumene this year, as it is aiming to expand its capacity.

Lithium metal producers are in a race to keep pace with the booming market in China. Globally, China has remained a dominant buyer of electric vehicles along with the EU, according to S&P Global Platts Analytics.

China's new energy vehicle market has seen record sales in 2021, riding on the country's efforts to reach lofty carbon goals.

Prices soar

As the key source material in lithium carbonate and hydroxide production, prices of spodumene have been rising in 2021 amid strong demand and tight supply.

S&P Global Platts assessed battery-grade lithium carbonate at Yuan 210,000/mt ($32,988.0/mt) Dec. 1, the highest level since Platts started the assessment on Sept. 7, 2018. Prices now have surged 382.76% from the year-ago levels.

Global spodumene supply is expected to be tight in 2022 in view of rising demand from downstream users, even though miners in Australia have accelerated their capacity, industry insiders said. Australia is the world's largest spodumene producer and exporter.

Platts assessed spodumene concentrate with 6% lithium oxide content (SC6) at $2,600/mt FOB Australia Nov. 26, up more than five times from the year-ago level. Prices hit $2,630 mt on Nov. 19-- the highest level since Platts first started assessing the grade on Jan. 31, 2019.