[SMM Analysis] Chengxin Lithium Obtains Mining License for Million-Ton Spodumene Mine

[SMM Analysis] Chengxin Lithium Obtains Mining License for Million-Ton Spodumene Mine
Recently, Chengxin Lithium announced that its invested company, Yajiang County Huirong Mining Co., Ltd. (hereinafter referred to as "Huirong Mining"), has obtained a "Mining License" issued by the Ministry of Natural Resources of the People's Republic of China.

The "Mining License" pertains to the Murong lithium mine in Yajiang County, Sichuan Province, with a total identified ore resource of 61.095 million mt and 989,600 mt of lithium oxide, making it the largest hard rock lithium deposit in Asia discovered to date and one of the highest-grade lithium mines in Sichuan (average grade of 1.62%).

According to the Yajiang County government website, the environmental impact assessment for the Murong lithium mine's mining and beneficiation tailings project has been publicly announced for the first time. The announcement indicates that the new lithium mine mining and beneficiation tailings project and supporting auxiliary facilities will adopt underground mining methods, with flotation processes used at the beneficiation industrial site, and a designed mining and processing capacity of 3 million mt/year.

Chengxin Lithium holds a total of 52.20% equity in Huirong Mining through direct and indirect means. The mining license is valid from September 5, 2024, to September 5, 2048. Obtaining the mining license marks a significant breakthrough in Chengxin Lithium's ability to secure lithium mine resources. The company will actively promote the development and construction of the Murong lithium mine project to achieve a substantial increase in lithium mine resource supply.

According to Chengxin Lithium's semi-annual report, the company currently has completed lithium chemicals capacity of 137,000 mt/year and metallic lithium capacity of 500 mt/year, including 42,000 mt of lithium chemicals from Zhiyuan Lithium, 30,000 mt of lithium chemicals from Suining Shehong, 5,000 mt of lithium chemicals from Chengxin Technology Phase I, 60,000 mt of lithium chemicals from Indonesia Shengtou, and 500 mt of metallic lithium capacity from Shengwei Lithium.

Additionally, with the expansion of lithium chemicals capacity, Chengxin Lithium has also increased its lithium resource development. Currently, the lithium resources in production include the Yelonggou lithium mine project, which can produce about 75,000 mt/year of lithium concentrate, the Sabi Star lithium-tantalum mine in Zimbabwe, which can produce about 290,000 mt/year of lithium concentrate, and the SDLA salt lake project in Argentina, with an annual production capacity of 2,500 mt of lithium carbonate equivalent.

Since the beginning of this year, several lithium mine projects in Sichuan have disclosed progress, seemingly signaling an acceleration. In March this year, Tianqi Lithium, CATL, and Chengxin Lithium planned to jointly invest in and operate power infrastructure to meet the development needs of the Cuola spodumene mine, Murong lithium mine, and Dechenongba lithium mine under the three companies.

Now, the Murong lithium mine has taken the lead in transitioning from exploration to mining. The Yajiang County government website shows that the tailings project environmental impact assessment for Tianqi Lithium's Cuola spodumene mine is being publicly announced.

Last year, Zhongzhong Mining (001203.SZ) acquired the Sichuan Jiada lithium mine for 4.2 billion yuan. Recently, it has started using the second TBM (full-section tunnel boring machine for rock layers) to excavate the exploration tunnel of the mine. Sichuan Energy Power (000155.SZ) responded to investors on October 16, stating that the construction of the Lijiagou lithium mine project is nearing completion, with the mining system expected to be pre-transferred to fixed assets in May 2024, and the mining and beneficiation system planned to start joint trial operation in Q3 2024, while the tailings storage construction continues to advance.

In addition to developing mines, Sichuan continues to add new lithium exploration rights this year. Recently, the Ministry of Natural Resources organized the Sichuan Provincial Department of Natural Resources to implement the listing and transfer of two lithium exploration rights, including the Rongxuka South lithium mine in Daofu County and the eastern periphery of the Jiajika lithium mine in Kangding City, with bidding starting on November 6.

According to the "Overall Plan for Mineral Resources in Sichuan Province (2021-2025)," Sichuan's lithium resources account for 50.8% of the national total, making it an important concentration area for lithium resources in China. In June this year, the Sichuan Provincial Department of Economy and Information Technology responded to the 14th Provincial People's Congress proposal, stating that it will increase exploration efforts in key areas such as Keeryin in Aba, Sichuan, and the deep parts of the Jiajika mine in Kangding, Sichuan, accelerate the exploration progress of existing exploration rights, quickly transition from exploration to mining, promote scientific development and efficient utilization of resources, and build a "Sichuan Mineral Precision Use" development system characterized by "accelerated exploration, scientific allocation, orderly mining, and precise utilization."