Ganfeng Lithium Group released a notice on June 8 stating that it has signed an investment agreement and a related supplementary agreement with the municipal government of Fengcheng to establish a joint venture company and build a production plant within the jurisdiction of Fengcheng. Based in China, Ganfeng is one of the world’s major producers of materials used in the manufacturing of lithium-ion batteries. Fengcheng is a city in the Chinese province of Jiangxi, where Ganfeng has already set up several production plants. The new joint venture is the vehicle for the investment in the new plant and will be subject to business registration.
The new plant is set to have an annual production capacity of 50,000MT for battery-related materials. Its construction will be divided into two phases. The first phase will involve the setup of the main production facilities, including an annual production capacity of 25,000MT for lithium hydroxide. The second phase will involve the setup of the auxiliary facilities, worker dormitory, and safety equipment.
With this capacity expansion project, Ganfeng will further scale up its production of lithium compounds and thereby capture more market share and ensure long-term growth. According to a related article from Reuters, Ganfeng plans to raise its annual production capacity for lithium carbonate equivalent by fivefold to around 600,000MT. As the demand for batteries grows rapidly due to the electrification of transportation, Ganfeng intends to enhance its competitiveness and profitability by attaining even greater economies of scale.
Based on the information released by the company, Ganfeng has been aggressively acquiring foreign sources of lithium. It currently has a stake in the following lithium mines and lithium brine lakes: the Mount Marion mine (Australia), the Pilgangoora mine (Australia), the Avalonia mine (Australia), the Sonora mine (Mexico), the Manono mine (DRC), the Mariana brine lake (Argentina), and the Cauchari-Olaroz brine lake (Argentina).
In terms of exclusive rights over lithium concentrate from mining projects, Ganfeng has secured 400,000MT/year from the Mount Marion mine, 310,000MT/year from the Pilgangoora mine (including phase 1 and 2), and 160,000MT/year from the Manono mine. The company also owns 75% of the production capacity of the Cauchari-Olaroz pond for battery-grade lithium carbonate. Currently, Ganfeng reports sufficient inventory with a six-month stockpile of spodumene.
Reports from brokerage and market intelligence firms indicate that Ganfeng continues to secure various sources of lithium (e.g., spodumene, brine, and clay) through purchases of shares and exclusive rights. Earlier this March, the board of Ganfeng approved a plan to acquire Ili Hongda Foundation Equity Investment Partnership. Through its subsidiary, Ili Hongda possesses a 49% stake in a lithium brine lake located in the Chinese province of Qinghai.
Moreover, Ganfeng offered to buy out Bacanora Lithium this May in order to secure the rights over the entire Sonora mine. It remains to be seen whether Ganfeng will be successful in this takeover attempt. At the same time, the company is reportedly to be in talks with the Argentinian government about building a local battery manufacturing plant. In sum, Ganfeng’s strategy is to diversify the sources of its lithium supply so as to minimize risks and maintain stable pace of development for its operations over the long term.
