• Connect with us
    • Information
      • About Us
      • Contact Us
      • Careers
      • Partnerships
      • Advertise With Us
      • Authors
      • Browse Topics
      • Events
      • Disclaimer
      • Privacy Policy
    • Australia
      North America
      World
    Login
    Investing News NetworkYour trusted source for investing success
    • North America
      Australia
      World
    • My INN
    Videos
    Companies
    Press Releases
    Private Placements
    SUBSCRIBE
    • Reports & Guides
      • Market Outlook Reports
      • Investing Guides
    • Button
    Resource
    • Precious Metals
    • Battery Metals
    • Base Metals
    • Energy
    • Critical Metals
    Tech
    Life Science
    Battery Metals Market
    Battery Metals News
    Battery Metals Stocks
    • Battery Metals Market
    • Battery Metals News
    • Battery Metals Stocks
    lithium investing

    China's Growing Interest in Australian Lithium-mining Companies

    Teresa Matich
    Jul. 19, 2015 10:50PM PST
    Battery Metals
    ASX:MIN

    China’s interest in Australian lithium-mining companies appears to be growing. Jiangxi Ganfeng Lithium recently signed an MOU for an offtake with Australia’s Reed Industrial Minerals. Neometals, which owns 70 percent of Reed, gained 8 percent on high trading volumes on the news last Friday.

    The share price of Australia’s Neometals (ASX:NMT) was on the rise on Friday after the company announced that its subsidiary, Reed Industrial Minerals, has signed a memorandum of understanding (MOU) for an offtake agreement with China’s second-biggest lithium producer.
    Under the terms of the MOU, Jiangxi Ganfeng Lithium (SZSE:002460) will buy 100 percent of the spodumene produced from the Mount Marion lithium project in Western Australia at benchmarked prices, subject to an agreed-upon price floor. However, Reed will still be able to take up to 51 percent of total production to sell itself “if greater commercial benefit can be derived from such product.”
    “This MOU is an exciting milestone achievement for Neometals and RIM, and we look forward to working with our project partners to progress the Mt Marion Project to the next stage of its development,” said Neometals’ managing director, Chris Reed, in Thursday’s release.
    Reed is 70-percent owned by Neometals, with the remainder owned by Process Minerals International, a subsidiary of Mineral Resources (ASX:MIN). Neometals’ share price gained 8.7 percent on Friday to reach AU$0.10 following the news. In all, 2.27 million shares of Neometals traded hands, over twice the daily average. Mineral Resources’ share price dropped 4.5 percent to hit AU$5.94.
    Also included in the MOU is the acquisition of an up-front 25-percent shareholding in Reed by Ganfeng, leaving Neometals with a 45-percent interest in the company and Mineral Resources with a 30-percent interest. Neometals will net roughly US$19.5 million from the transaction. Process Minerals International and Ganfeng will also be granted additional options to increase their shareholdings in Reed Industrial Metals, and if those options are fully exercised, Neometals will own 13.8 percent of Reed.
    Mineral Resources will operate Mount Marion, which currently has a JORC resource of 14.8 million tonnes at 1.3 percent lithium oxide. Should an agreement be reached between the companies, it will trigger a final investment decision, with construction at the project potentially starting up shortly thereafter; lithium concentrate production could then begin by mid-2016. The companies will aim to finalize formal agreements, with the MOU expected to close by August 31.
    Financial closing of the transaction is conditional on Ganfeng completing financial, technical and legal due diligence, and gaining the necessary board, shareholder and government approvals.

    Lithium Hydroxide?

    Neometals — previously Reed Resources — is one of the only lithium companies in the world looking to produce lithium hydroxide directly, rather than lithium carbonate (Nemaska Lithium (TSXV:NMX,OTCQX:NMKEF) is one of the only others). It has an Australian patent on its process.
    Lithium hydroxide is becoming increasingly important for lithium-ion battery producers, and the latest industry report from Stormcrow Capital forecasts that both battery-grade lithium hydroxide and lithium carbonate prices will rise from $7.08 per kilogram to $9.39 by 2025.
    However, as stated above, the MOU with Ganfeng is for spodumene ore, not lithium hydroxide.
    Reed had suggested that Mount Marion was on track for a production start up five years ago, but that didn’t materialize. The company recently purchased an adjoining mining lease and associated infrastructure next to the project from Metals X (ASX:MLX), and is currently working on a “new resource exploration potential estimate” for the project.
    Neometals did not respond to an emailed request for comment.

    China’s growing interest in Australian lithium-mining companies?

    Last year, Australia narrowly beat out Chile for the top spot as world’s largest lithium producer, putting out 13,000 tonnes. Mount Marion is set to add 5,500 tonnes per year to that figure.
    Western Australia also hosts the world’s largest lithium mine, Greenbushes, which is operated by Talison Lithium. That mine is owned by another leading Chinese lithium producer, Tianqi Lithium (SZSE:002466).
    Certainly, it’s interesting to see China taking even more of an interest in Australian lithium production. With lithium demand from the battery industry rising, it’s no surprise that key market players are making moves to secure the resource. For investors, it’s worth reiterating a point often made by Chris Berry of House Mountain Partners: production costs are the name of the game. “You have to have some sort of differentiator that allows you to prove that you can produce a tonne of lithium carbonate at a cost that’s competitive,” he’s said previously.
    Certainly, there’s no doubt that although the lithium price is rising, being able to negotiate offtakes at the right price will leave lithium juniors and producers better positioned to create shareholder value.
    Market participants will be watching for the closure of the MOU, and for production to start at Mount Marion.
     
    Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.

    largest lithium minelithium companiesaustraliachinabiggest lithium producerchris berryasx:mlxlithium investingasx:minlargest lithium producer
    The Conversation (4)
    Alexandra Carolino
    Alexandra Carolino
    04 Mar, 2016
    What is the reason why there is no reference to the production of lithium in Portugal?
    1 Reply Hide replies
    Show More Replies
    Alexandra Carolino
    Alexandra Carolino
    04 Mar, 2016
    What is the reason why there is no reference to the production of lithium in Portugal?
    1 Reply Hide replies
    Show More Replies

    Go Deeper

    AI Powered
    Lithium periodic symbol and electric vehicle.

    7 Biggest Lithium-mining Companies in 2025

    Silver square with the lithium periodic symbol standing upright next to lithium metal.

    Top 9 Lithium-producing Countries

    Latest News

    Quarterly Activities/Appendix 5B Cash Flow Report

    Quarterly Activities/Appendix 5B Cash Flow Report

    Vertex Minerals Limited Capital Raising Update

    Maiden Mt Boppy Open Pit Ore Reserve

    Galan Lithium Limited: Incentive Regime for HMW Project in Argentina

    More News

    Outlook Reports

    Resource
    • Precious Metals
      • Gold
      • Silver
    • Battery Metals
      • Lithium
      • Cobalt
      • Graphite
    • Energy
      • Uranium
      • Oil and Gas
    • Base Metals
      • Copper
      • Nickel
      • Zinc
    • Critical Metals
      • Rare Earths
    • Industrial Metals
    • Agriculture
    Tech
      • Artificial Intelligence
      • Cybersecurity
      • Gaming
      • Cleantech
      • Emerging Tech
    Life Science
      • Biotech
      • Cannabis
      • Psychedelics
      • Pharmaceuticals

    Featured Battery Metals Stocks

    International Lithium Corp.

     
    ILC:CA

    Metals Australia

     
    MLS:AU

    Lithium Africa

    Atlantic Lithium

     
    A11:AU

    Galan Lithium

     
    GLN:AU

    Jindalee Lithium

     
    JLL:AU
    More featured stocks

    Browse Companies

    Resource
    • Precious Metals
    • Battery Metals
    • Energy
    • Base Metals
    • Critical Metals
    Tech
    Life Science
    MARKETS
    COMMODITIES
    CURRENCIES
    ×