China’s Ganfeng Lithium Boosting Capacity with $630M Financing
Ganfeng Lithium (US: GNENF, SHE: 002460, HKG: 1772), one of the world’s top lithium producers, said on June 11, it would sell around USD$630 million in new shares to fund potential investments and boost its lithium production capacity.
The company intends to use 80% of the raised capital for capacity expansion, mostly at its lithium projects overseas, and potential investment in lithium resources. The other 20% has been earmarked for replenishment of working capital and general corporate purposes.
In March, Ganfeng announced an ambitious plan to increase its lithium production capacity roughly five times to 600,000 tonnes of lithium carbonate equivalent a year. The Chinese company has made serious financial commitments to Argentina to further its capacity.
As one of the world’s top producers of the commodity used in electric vehicle batteries, Ganfeng signed a deal to explore setting up a battery plant in Argentina. The non-binding agreement with Argentina’s Ministry of Productive Development and the Jujuy provincial government, explores the possibility of building a battery plant and further resource exploration or acquisition.
“We want to support the industrial development of Argentina to make it one of the most important lithium-producing countries in the world...” -Ganfeng Chairman Li Liangbin
In early May, the company announced the acquisition of lithium explorer and developer Bacanora Lithium (LON:BCN), becoming the sole owner of the Sonora project, in Mexico. The mine is expected to begin production in 2023 and produce 35,000 tonnes of lithium per year once at full tilt.
The Chinese company is also developing the Cauchari-Olaroz lithium brine project in Argentina’s northwestern Jujuy province, close to the proposed battery plant.
Beijing announced last year a development plan for the “new energy vehicle” (NEV) industry from 2021 to 2035. It is targeting a 20% share of NEVs in the country’s total vehicle sales by 2025.
A recent study by the International Energy Agency (IEA) recommends governments start stockpiling battery metals, noting that lithium demand could increase 40 times in the next 20 years.
IEA executive director Fatih Birol said this would become an “energy security” issue. China dominates lithium processing, while mine supply overwhelmingly comes from Chile and Australia.
China controls 70% of the world’s lithium supplies, 80% of rare earth metals and roughly 70% of the world’s graphite.
There are 137 lithium projects on Prospector Portal.
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