China's Ganfeng Lithium stakes out overseas claims in hot market
Lithium 'supermarket' aims to double production by 2025 as EV demand swells
GUANGZHOU -- China's Ganfeng Lithium is snapping up lithium mines and salt lakes abroad as it plots out an ambitious road map for growth amid a pivot to electric vehicles.
A crucial material for batteries, lithium is an increasingly hot commodity as the world seeks energy storage solutions to aid its shift to renewables, and Ganfeng plans to double production by 2025 compared to 2020 to help meet this demand. The company signed supply deals with Tesla of the U.S. in 2018 and Germany's Volkswagen in 2019.
This push will create a greater need for raw materials, and Ganfeng is buying up interests in lithium concessions around the world for this purpose.
The company turned the controller of a salt lake project in Argentina into a wholly owned subsidiary in October, and in May reached a 190 million pound ($250 million) deal to raise its stake in U.K.-based Bacanora Lithium, owner of the Sonora project in Mexico, to 100% from 29%. It announced plans in June to spend $130 million for a stake in a lithium mine in Mali.
"Over the past five years, Ganfeng has continually increased its production capacity and sought out high-quality resources in many areas of the world," Vice Chairman Wang Xiaoshen said at an electric-vehicle industry event in Hainan this past fall.
Ganfeng was established in 2000 by Li Liangbin, formerly a researcher at a lithium plant in Jiangxi Province, where it is now based. The company entered the spotlight in 2009, when it became the first in China to set up facilities to extract lithium carbonate usable in batteries from salt lake brine. After going public in Shenzhen in 2010, it began investing in lithium projects abroad.
A Chinese brokerage put Ganfeng's lithium-compound production capacity last year at 90,000 tons. The company aims to boost this to at least 200,000 tons by 2025, Wang says -- enough for more than 4 million electric-vehicle batteries. Its goal is to eventually lift capacity to 600,000 tons per year.
Ganfeng accounted for 24% of global output of lithium hydroxide last year, according to China Minmetals, marking a substantial jump from the previous year's 18%. That puts it not far behind U.S.-based Albemarle, which leads production of the material used in electric-vehicle batteries. The top five list is split between the U.S. and China.
Dubbed a lithium "supermarket" for its wide range of offerings, Ganfeng is delving into battery production itself. The company is set to start up a plant in its home city of Xinyu in 2023, where some analysts expect it to make solid-state batteries.
Lithium prices have soared as demand outstrips supply. The market price for lithium carbonate in China has tripled from the start of 2021, topping 200,000 yuan ($31,000) per ton last month, according to Chinese research firm Baiinfo. With Albemarle expecting demand for lithium for electric vehicles to jump nearly twentyfold between 2020 and 2030, this trend looks unlikely to change anytime soon.
But potential pitfalls lie ahead for Ganfeng's expansion drive. Central and South American countries are growing more resistant to foreign ownership of their natural resources.
Ganfeng said in October that the Mexican government has yet to approve the Bacanora deal. Mexican President Andres Manuel Lopez Obrador sent a proposed constitutional amendment to Congress that month that would nationalize lithium exploration.
"Governments may intervene more in foreign investment, by Chinese companies and others," said an expert on the lithium market.
Ganfeng faces increasingly intense competition as well, as its pursuit of Canada's Millennial Lithium illustrates.
The Chinese company had reached a deal in July to buy Millennial, which has lithium salt lake projects in Argentina. But compatriot Contemporary Amperex Technology (CATL), the world's top maker of electric-vehicle batteries, made a better offer in September. CATL was outbid in turn last month by Canada-based Lithium Americas, which is part-owned by Ganfeng.
The lithium market has been prone to ups and downs, and Ganfeng has run into trouble on more than one occasion. While prices are strong now, the risk remains of investment overheating as companies pile into a fast-growing field.