BEIJING Reuters - The head of China's Zijin Mining Group Co Ltd said that lithium prices are now at record levels and could be halved by the end of 2025, but the miner would still forge ahead with heavy investment in the sector.
China's top gold extractor and a leading producer of copper, has already spent $16 billion buying three lithium mines over the past year, making it one of the world's top 10 producers of the battery metal. A flurry of deals comes even as warnings emerge that lithium prices, driven to records by rapid growth in electric vehicles, may peak next year because of a looming supply glut.
Zijin hopes to become one of the top three to five mining companies in the world by the year 2030. To do that, we need a new growth driver on top of our gold, copper and zinc sectors, said Zou Laichang, company president.
We need new energy and new materials to achieve this goal. Zijin recently bought Canada's Neo Lithium Corp, a company focused on lithium mining in Argentina, bought for C $920 million $690 million in a deal completed in January, giving it access to the Tres Quebradas 3 Q project.
It also bought the majority stakes in the Lakkor Tso Lithium Salar mine in China's Tibet region and the Xiangyuan lithium mine in Hunan province.
More investments are planned, and there is no information on how much money the company is planning to spend. Zijin has a market value of around $35 billion and a net profit of 15.7 billion yuan $2.2 billion last year.
China's battery maker Contemporary Amperex Technology Co Ltd, CATL, and automakers BYD and Tesla are among the few companies that are seeking access to lithium.
Some firms are working on developing alternative battery materials that could reduce lithium demand in the long term.
There are concerns but we will take full advantage of our technology and cost advantage to stay competitive, Zou said.
He said that they've been working on their lithium extraction from salt lake brine and hard-rock deposits to bring down cost and improve utilisation rate efficiency.
In the second half of the year, a surge in supply is expected to push prices back to a normal range of 300,000 yuan to 400,000 yuan a tonne, according to Zou.
It would cut as much as half from China's current spot lithium carbonate battery grade prices, which according to Fastmarkets are a record 597,500 yuan $83,430 a tonne, about three times higher than they were a year ago.
China accounts for about 60% of world lithium chemical supply and its prices are an important global benchmark. Zijin said recently that it made its mine acquisitions based on the lithium carbonate prices of 100,000 yuan a tonne.
There are growing headwinds for Chinese miners who are looking to invest overseas. In March, Canada ordered three Chinese companies to give up investments in lithium mines there, citing national security.
Zou said that we will be more careful and focused on assessing policy and political risks.
Zijin is also in a legal dispute with Australian miner AVZ Minerals Ltd over the purchase of a 15% stake in the Democratic Republic of Congo's Manono project, thought to be one of the world's largest lithium mines.
According to an investor briefing on Nov. 15, Zijin hopes to have 150,000 tons of lithium carbonate equivalent LCE capacity by the year 2025.
It is about half of the capacity planned by the major Chinese producer Ganfeng Lithium Co. Ltd. Zijin is expanding downstream and starting lithium iron phosphate LFP production. By the end of this year, about 20,000 tons of LFP capacity will be launched, according to Zou.