Chinese Battery Giant CATL Jumps Into Battle for Major Mining Firm
China’s leading battery manufacturer CATL is continuing to increase its reserves of lithium mine resources. According to an announcement released on November 28, it became the first investor in the bankruptcy and reorganization of Sinuowei Mining in Sichuan Province, aiming to control the enterprise with an annual output of 300,000 tons of lithium and enhance its supply chain support capabilities.
Sinuowei Mining now owns the prospecting rights for detailed investigation of the Dechenongba Lithium Mine and Quartzite Mine in Yajiang County, Sichuan. The Dechenongba site is categorized as a “super-large” lithium mine, capable of achieving a production scale of 1 million tons per year. The annual production capacity of lithium concentrate can reach 300,000 tons after production.
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However, Sinuowei Mining closed down due to poor management last year. The auction of 54% equity of the company soared from a price of 3.55 million yuan to 2 billion yuan ($494,456 to $279 million) in May this year. However, the winner eventually gave up the purchase and is currently in the third round of auctions.
At the same time, due to insolvency, Sinuowei Mining is currently in the stage of bankruptcy proceedings. On October 11, a local court ruled that it should be reorganized, effective immediately. With the consent of the court and in accordance with relevant regulations, the administrators openly recruit and select restructuring investors for the whole country.
Competition for Sinuowei Mining is still fierce, and market demand for lithium resources remains high. At the beginning of this year, the price of battery-grade lithium carbonate was about 280,000 yuan per ton, and now it has reached about 600,000 yuan. With the limited supply of lithium ore, the resources of Sinuowei Mining have become the object of significant attention.
It is worth noting that, after buying 54% equity of Sinuowei Mining, the winner still may not obtain a controlling share of the company. As Sinuowei Mining has entered bankruptcy proceedings, the right to speak on the reorganization process is more important. CATL has been named as the first reorganization investor, while GCL Energy Technology, the second reorganization investor, is also a listed company with a significant position.
It is not surprising that CATL has intervened in the reorganization of Sinuowei Mining. Under the background of rising lithium prices, the industry leader has accelerated its layout of upstream resources in recent years, especially focusing on Sichuan, which holds the best lithium resources in China.
Intervening in Sinuowei Mining could be CATL’s first step to “grab mines” in Sichuan. A capital investor who has been tracking lithium mine resources in western Sichuan for a long time, told China Securities Journal that intervening with Sinuowei Mining to acquire the Dechenongba lithium mine is only the “appetizer,” and that the adjacent Jiajika new No. 3 (X03) ore vein might be the ultimate goal of CATL. “The boundary between Dechenongba Lithium Mine and X03 vein partially overlaps, and it is the same orebody itself,” said the source.
According to data released previously, 894,900 tons of lithium oxide resources were discovered in X03, twice that of the No. 134 Pegmatite, Jiajika mine. At the same time, the associated beryllium, niobium and tantalum are large in scale and can be comprehensively utilized.