SMM October 27th: on October 24th, Ganfeng Lithium Industry announced that its wholly owned subsidiary Shanghai Ganfeng made a tender offer for Bacanora, because the Mexican government's examination and approval process for the matter had not yet been completed. According to the British tender offer process and relevant laws and regulations, Shanghai Ganfeng and Bacanora have applied to the British M & A Commission to suspend the tender offer process. The tender offer process will be resumed after the matter has been approved by the Mexican government.
It is reported that the tender offer agreement was reached in May this year, when Ganfeng Lithium agreed to its wholly-owned subsidiary Shanghai Ganfeng to make an offer for all issued shares of Bacanora with its own capital of no more than 190 million pounds at its board meeting on May 6. Upon completion of the subscription, Shanghai Ganfeng will hold a 100% stake in Bacanora.
In August 2021, Shanghai Ganfeng has formally issued a legally binding offer for all the issued shares of Bacanora. Prior to the acquisition, Shanghai Ganfeng already held a 28.88 per cent stake in Bacanora; if the acquisition is successful, Shanghai Ganfeng will take full control of Bacanora.
On Oct. 24, Ganfeng Lithium issued a notice saying that the above offer is going through the acceptance procedures of Bacanora shareholders and the approval work of the Mexican government. However, as the Mexican government's approval process for the matter has not yet been completed, Shanghai Ganfeng and Bacanora took the initiative to apply to the British M & A Commission to suspend the tender offer process.
At present, there is speculation in the market that the delay in the acquisition of Ganfeng Lithium may be related to the new plan recently put forward by the President of Mexico. Mexico plans to tighten its lithium mining policy, and its President Lopez said the Mexican government will still allow existing miners to continue to develop lithium mines in Mexico, but will not approve new projects. Although this situation will not affect the Sonora project, the market still speculates that the acquisition approval progress may be affected by this political wind.
According to public data, the Sonora lithium project, located in Mexico, is currently one of the largest lithium resource projects in the world. Shanghai Ganfeng and Bacanora each own 50 per cent of the Sonora project.
According to the feasibility study report released by the Sonora lithium project, its total lithium resources add up to about 8.82 million tons of lithium carbonate equivalent. If the follow-up progress goes smoothly, the first phase of the project is expected to be completed and put into production within four years, with an estimated total cost of 420 million US dollars. After the completion of the construction, the first phase of the project is expected to achieve an annual capacity of 20000 tons of lithium hydroxide.
It is worth mentioning that, according to SMM research, due to the persistent shortage of domestic battery-grade lithium hydroxide, its spot price has continued to rise since the end of 2020 and was successfully overtaken by battery-grade lithium carbonate near the middle of September. At present, the shortage of battery-grade lithium carbonate has exceeded that of lithium hydroxide, and the supply of lithium hydroxide has warmed up somewhat after entering August, but remains high.
According to a recent SMM survey, the market demand for lithium hydroxide fell in October due to power cuts and reduced orders for high-nickel materials, resulting in an oversupply of about 10% of lithium hydroxide on the market, while orders from leading manufacturers were good and quotations remained high. SMM expects lithium hydroxide to rise in the short term. However, yesterday, Pilbara's third lithium concentrate auctioned again at a record high price, which is expected to further stimulate the price rise of lithium salt factories.
As of October 27, the average price of domestic battery-grade lithium hydroxide was 186500 yuan / ton, up 137000 yuan / ton or 276.8% from the beginning of the year.
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On October 26th, Ganfeng Lithium Industry released third-quarter financial data, which showed that the company achieved a total operating income of 2.989 billion yuan in the third quarter, an increase of 98.50% over the same period last year, and a net profit of 1.056 billion yuan, up 506.99% from the same period last year. In line with its previous expectations for third-quarter net profit. So far, Ganfeng Lithium Industry has achieved a net profit of 2.472 billion yuan in the first three quarters, up 648.24% from the same period last year.
Related reading: Ganfeng lithium industry's net profit soared by 506.99% in the third quarter, with an average daily increase of nearly 3000 yuan / ton.
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