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Analysts: Chinese Businesses Ready for the Possible Minor Consolidation in the Lithium Mining Industry amidst Surging Lithium Prices
2021-10-18   |  Editor:et_editor  |  231 Numbers

According to the coverage of Bloomberg News, the price of lithium, a critical element in the batteries of electric vehicles, has been constantly surging recently, but analysts believe that the relevant transaction rush for this material will not deteriorate accordingly, despite record-breaking prices.

The lithium mining industry has been bombarded with news surrounding acquisitions recently, with the most prominent being the competitive bid on the Canadian lithium mining company Millennial Lithium from two major Chinese companies. Millennial Lithium possesses an abundance of lithium assets in Argentina, which yielded the competition and quote proposal between CATL and Ganfeng Lithium, where the former took away the victory at the end.

Industrial consultants, the investment bank sector, and analysts believe that the surging prices of lithium will not stop this wave of mergers and acquisitions since it is a critical raw material for electric vehicles.

A BloombergNEF analysts pointed out that the current constrained supply and the steady demand for batteries have resulted in a nearly five fold growth in the prices of lithium carbonate in China, which is a historical high, and the export price of lithium from the country is also increasing simultaneously, though the rate of increase is not as rapid as that of the domestic market due to the lack of a spot transaction market.

Global auto manufacturers and battery businesses are ensuring the supply status of products such as lithium, copper, and nickel that are adopted in future products amidst the worldwide implementation and transformation of green energy.

Chris Berry from Washington DC-based industry consulting firm House Mountain Partners pointed out that the bidding for Milennial Lithium is merely the beginning, as these acquisitions are only going to intensify in quantity primarily from internal and external businesses of the supply chain for electric vehicles who are actively planning for decarbonization.

It is reported that Chinese businesses have been attempting to take over the dominating position of the electric vehicle supply chain, which explains their aggressive obtainment of strategic raw materials from South America. Ganfeng Lithium now has mining sites in Argentina, Australia, and China as a result of constant acquisitions, and had also acquired Mexico-based Bacanora Lithium in August. CATL is a shareholder of Neo Lithium, and has an excavation program in Argentina.

Matthew Hind, Global Head Metals and Mining of Scotiabank, believes that China’s continuous search of lithium will trigger a small consolidation within the lithium mining industry, where EV and strategic partners will be purchasing mining plants together in the future to ensure unimpeded sources. In other words, the consolidation of the lithium mining industry will be actuated by several different companies.

 (Cover photo source: Lithium [CC BY-SA 2.0], via Wikimedia Commons)

 
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