Sichuan-based mining and manufacturing firm Tianqi Lithium released two announcements on September 21 aimed at boosting its stock price and market value. First, its wholly owned subsidiary plans to use up to $100 million of its own funds to serve as a cornerstone investor in the Hong Kong IPO of battery firm China Aviation Lithium Battery (CALB). At the same time, it intends to use between 136 million yuan and 200 million yuan ($19.2 million – $28.2 million) to repurchase shares for an employee stock ownership plan.
As partners in the upstream and downstream industrial chain, these two parties have cooperated before. In May this year, CALB and Tianqi Lithium started joint investment and R&D in lithium salt, lithium ore and other fields. Meanwhile, they have agreed that Tianqi Lithium will sell battery-grade lithium carbonate through its subsidiary to CALB from June to December this year.
On July 13, Tianqi Lithium was officially listed on the Hong Kong Stock Exchange, becoming the second lithium company after Ganfeng Lithium to be listed in both A shares and Hong Kong. For the IPO of Tianqi Lithium, CALB invested about $50 million as a cornerstone investor.
However, the A-share price of Tianqi Lithium has fallen for more than two months since it peaked at 148.57 yuan ($20.9) on July 6, trading at 114.94 yuan at press time. Its stock repurchase for no more than 150 yuan per share has given investors a great deal of confidence.
Tianqi Lithium achieved operating revenue of 14.296 billion yuan in the first half of the year, up 508.05% year-on-year, while its net profit reached 10.328 billion yuan, a year-on-year increase of 11937.16%. The rising price of lithium is an important factor. The price of battery-grade lithium carbonate rose by 2,500 yuan per ton to 507,500 yuan per ton, according to data released by Mysteel Research Institute on September 21. Industrial-grade lithium carbonate, lithium hydroxide and other lithium product prices have also risen.
Both battery manufacturers and new energy vehicle manufacturers have extended into the lithium resources industry. CATL has long been investing and buying lithium mines to bolster the stability of its raw material supply. At the end of May, The Paper reported that BYD had secured six lithium mines in Africa. These facilities will produce 1 million tons of lithium carbonate, which is expected to cover the company’s raw material needs for the next decade.