Ganfeng Lithium, China’s largest lithium compounds producer, is tightening its grip on the battery raw materials market by agreeing to buy a 30% stake in Mexico-focused Bacanora Lithium.
London-listed Bacanora has signed a non-binding agreement for Ganfeng to pay £14.4 million (US$18.3m) in cash for the stake— in addition to the Chinese firm taking an initial 22.5% direct interest in northern Mexico’s Sonora Lithium Project for £7,563,649, with an option to increase its stake up to 50%.
Bacanora CEO Peter Secker said the investment would be “a major milestone” in the development of Sonora— where the company would like to see production start in 2021.
Secker said: “Not only will it provide industry validation of Sonora’s clear potential to become a key supplier of battery grade lithium but, subject to Ganfeng exercising its option to increase its interest in Sonora to 50%, our share of the capital costs required to construct an initial 17,500 tonnes per annum lithium carbonate operation at Sonora would be halved.”
Ganfeng deputy chairman Wang Xiaoshen said the deal would form a cornerstone to the company becoming the world’s largest lithium producer. “Specifically, the Sonora deposit is large and scalable, with low operating costs.”
Final due diligence on the agreement is expected to be completed by the end of June 2019.
In 2018, Ganfeng finalised a deal with Canada’s Lithium Americas to develop and operate Argentina’s Cauchari-Olaroz lithium brine project.
Also last year, Ganfeng signed a deal to supply a fifth of its production to Tesla— which would designate its battery suppliers to buy lithium-hydroxide products from Ganfeng.