Original title: With 16.8 billion in cash, Zijin Mining intends to lay out lithium mines and the global core resources have been divided up
A radical view is that, under the general trend of carbon peaking and automobile electrification, the strategic position of lithium resources is equivalent to “white oil.”
There are more and more players who want to join this circle. Even Zijin Mining, the “big brother” in the domestic non-ferrous industry, has difficulty suppressing the urge to “grab mines”.
Chen Jinghe, chairman of Zijin Mining, said in an interview with the media on August 2, “The company will develop and deploy lithium resources. In the future, it plans to acquire some projects and mine assets, and open up the entire industrial chain from upstream to materials.” On the same day, Zijin Mining’s share price was large. Up 5.46%.
However, the company quickly announced that “the layout of new energy minerals such as lithium is based on the company’s initial strategic plan, and there is no specific time schedule or specific project arrangements. Up to now, the company has not planned any specific projects.” 8 On March 3, the stock price turned down again.
Although the acquisition of Chunxin Sprouting has not yet been implemented, it shows from the side that the current lithium mining assets are booming, and even the non-ferrous brother Zijin Mining cannot be aloof.
Taking the secondary market trend only as an example, as of August 2, the average annual growth rate of the lithium mine and salt lake lithium extraction sector reached 153% and 149%, respectively, which far exceeded the cobalt mine, power battery and vehicle manufacturing in the same period. New energy vehicles are subdivided into segments.
On the other hand, Zijin Mining has benefited from the increase in gold and copper prices in the past two years, and it has plenty of money on hand. As of the end of June this year, the company’s cash and cash equivalent balances reached 16.827 billion yuan, an increase of nearly 7.7 billion yuan over the same period last year, and the “consumption” impulse increased accordingly.
However, even if Zijin Mining puts its “ideas” into action in the future, it will face considerable challenges.
The South American “Lithium Triangle” and Western Australia mines are occupied by Albemarle and the domestic “Lithium duo”. The domestic Qinghai Salt Lake and Western Sichuan lithium mines have gathered a large number of local state-owned enterprises, central enterprises and listed companies, and the interest structure has been very fixed.
Especially in the current situation where the economy is still rising, which company will easily sell lithium mining assets?
The overall situation of the head lithium mine has been determined
The distribution of lithium resources in the world is very uneven.
According to data from the US Geological Survey and China National Gold Securities, global lithium resources mainly exist in the form of salt lakes, ore lithium and clay lithium, of which salt lake lithium resources account for 58% and lithium concentrates account for 26%.
As far as the salt lake resources are concerned, they are mainly distributed in Chile, Argentina and Bolivia in South America, while the lithium concentrate is dominated by Australia, which is the world‘s largest lithium concentrate exporter.
However, the above-mentioned high-quality resources have already been allocated, and a “marriage” pattern that is difficult to break has been formed.
Let’s talk about the salt lake. The world’s largest salt lake Uyuni, known as the “Mirror of the Sky”, is currently mined mainly in Chile and Argentina.
Ranked second is Chile’s Atacama Salt Lake, which is jointly developed by Chilean Chemical Mining Company (Tianqi Lithium) and Albemarle of the United States. Albeit also owns the development rights of 16,700 hectares of Atacama Salt Lake in Chile.
Argentina’s main salt lakes are mainly owned by Argentina’s Minera Exar, Australian lithium miner Orocobre, and Ganfeng Lithium. Ganfeng Lithium holds an 88.75% equity in Mariana Salt Lake and a 51% equity in Minera Exar.
Let’s talk about Australian mines. The Greenbush mine in Western Australia with the largest reserves, highest grade and lowest cost is owned by Tianqi Lithium and Albemarle.
Ranked second in Mt Marion, Ganfeng Lithium holds 50% of the shares and owns the underwriting rights of the mine. Other major mines with a production capacity of about 200,000 tons are mainly owned by Australian companies such as Pilbara, Altura and Galaxy.
It seems clear from this that the main salt lake and mine resources are mostly concentrated in the hands of the lithium salt company Albemarle of the United States and the domestic “lithium industry duo”.
Among them, a certain amount of joint investment and shareholding is involved. For example, the top ranked Atacama Salt Lake and Greenbush Lithium Mine, both Tianqi Lithium and Albemarle.
In terms of domestic resources, China’s total reserves account for about 6% of the world‘s total, but the rights to develop resources are mostly concentrated in the hands of “players in the circle” and local state-owned enterprises and central enterprises.
Qinghai Salt Lake, the development companies include Salt Lake, a subsidiary of Qinghai State-owned Assets, and companies under the central government CITIC and Minmetals; Sichuan Lithium Mine has gathered local state-owned Sichuan Energy Investment, and Yahua shares, Rongjie shares and many other listed companies .
It should be pointed out that under the background of the surge in demand for new energy vehicles, the development of lithium mines with low development difficulty and high economic value has been accelerated, and efforts have been made to release production capacity. Many other unformed production capacities are restricted by certain objective factors, such as no results have been seen for many years. Lithium mine in western Sichuan.
Under the above background, even if Zijin Mining takes substantial acquisitions in the future, it will be difficult to obtain top-ranked high-quality lithium resources. After all, major players including Yabao, Tianqi Lithium and Ganfeng Lithium are themselves The producers of lithium carbonate and lithium hydroxide downstream of lithium mines have their own demands to ensure the supply of raw materials.
In addition, the layout of the above-mentioned core minerals was not accomplished overnight, and huge risks were taken during it. For example, Tianqi Lithium’s acquisition of SQM’s equity once caused the company to fall into a liquidity crisis. How can the high-quality assets that have been struggling to be easily sold?
Conjecture that Zijin Mining’s acquisition breaks the game
Regarding the plan to acquire lithium mines, Chen Jinghe explained that “the energy structure is now changing, and a new round of electrification represented by new energy vehicles is proceeding in full swing, and the speed is extremely fast.”
The transformation of traditional mineral giants to new energy upstream minerals is not an isolated case.
The Australian iron ore giant Rio Tinto recently announced that it will spend US$2.4 billion to develop the Jadar lithium borate project in Serbia, which will mainly produce battery-grade lithium carbonate and borate, which can be used to produce solar panels and wind turbines.
From the perspective of the project cycle, the project plans to achieve large-scale production in 2026 and reach its maximum production capacity in 2029. Obviously, mining giants value more long-term energy transformation.
In the same way that Rio Tinto has benefited from the rise in iron ore, Zijin Mining has also accumulated a large amount of funds in the systemic rise of non-ferrous metals in the past two years.
According to data from Zijin Mining’s semi-annual report, as of the end of June, the “balance of cash and cash equivalents” representing short-term availability reached 16.827 billion yuan, and this figure was only 9.139 billion yuan in the same period in 2020.
One year later, Zijin Mining’s cash assets increased by nearly 7.7 billion yuan. With heavy gold in hand, Zijin Mining follows industry trends and invests in new energy upstream minerals.
Even if it spends 10 billion yuan, it is enough to acquire some relatively high-quality mine assets.
However, from the perspective of the timing of acquisition, Zijin Mining is undoubtedly slower than a beat. Now is not the low lithium price in 2019. Western Australia mines are shutting down and going bankrupt.
Under the background of the relatively fixed supply pattern of the head lithium resources, it will be difficult for Zijin Mining to acquire the “core assets” of the aforementioned salt lakes and spodumene mines. Moreover, in the current market environment, lithium, cobalt and other new energy minerals The premium must not be low.
One way is for the company to adopt a direct acquisition method, and the alternative directions include relatively high-quality lithium mining assets in Canada and some countries in Africa.
Among them, the two major lithium mines in Canada, Whabouchi and JamesBay, have a grade of 1.4%, with reserves exceeding one million tons of lithium carbonate equivalent. In terms of grade and reserves, they are superior to the domestic two major spodumene mines, Lijiagou and Methylcar.
The African region includes Manono in the Democratic Republic of Congo, Arcadia in Zimbabwe, and Goulamina in Mali. The first two companies belong to Australia’s Prospect Resources and AVZ Mining, and have cooperated with Ganfeng Lithium and China Mining Resources. A domestic listed company signed a long-term offtake agreement.
In contrast, Zijin Mining has previously deployed assets in the above-mentioned countries, such as the Kamoa-Kakura copper mine in the Democratic Republic of Congo.
Using this as a foreshadowing, subsequent acquisitions of lithium mining assets from the local area may be easier to achieve.
The other way is to directly invest in the lithium giants that master the “core resources” through equity participation, but considering the capital situation of several leading companies and the previous acquisition style of Zijin Mining, this possibility is not Big.
Of course, in the future, Zijin Mining may also end up participating in the war in an unexpected way. As for which mine will ultimately be chosen, it is still unknown.
Perhaps, when Chen Jinghe gave his answer to “purchase lithium mines”, he already had a potential acquisition target in his mind.
(Author: Dong Peng Editor: Zhu Yimin)
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