Huayou Cobalt Industry plans to acquire African Lithium Mine for US $422 million to make up for the deficiency of upstream resources.

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Benefiting from the continued popularity of the new energy industry, another A-share listed company has been added to the overseas "lithium" group. On the evening of December 22nd, Huayou Cobalt announced that it planned to acquire a 100 per cent stake in Prospect Lithium Mine in Zimbabwe for US $422 million through its subsidiary Huayou International Mining, as well as related claims under the Inter-Company loan Agreement. It is worth noting that the lithium mining company has completed the shipment and sale of the first batch of lithium products, but has not yet made a profit.

On the morning of December 23, a person related to Huayou Cobalt Industry told the Financial Associated Press that the company's current development strategy is to "control resources, expand the market, and improve the ability". This acquisition is one of the strategic layouts of the company in the upstream, that is, to replenish lithium ore resources; after the completion of the acquisition, on the one hand, it will be used as the storage of the company's resources, on the other hand, it will guarantee the future cost and self-supply rate.

He further explained that in terms of lithium carbonate equivalent resources, the prospect lithium ore is equivalent to a medium-sized lithium ore. The company's existing Bamo and some participating cathode materials companies have a large demand for lithium resources, and the company predicts that the demand for lithium ore will continue to grow, and the growth rate will be faster.

Baichuan Yingfu cathode material expert Ji Zewei told reporters that the current acquisition of lithium mines may not be very cost-effective, but competing for lithium ore resources is an inevitable trend. With the completion of this acquisition, Huayou Cobalt will be involved in the development of lithium, cobalt and nickel resources to further improve the integrated layout of the lithium material industry chain. He pointed out that the current lithium battery has not yet reached the peak of the market situation, which will increase the attractiveness of downstream battery factories and the market.

Prior to this, Huayou Cobalt and 000426.SZ signed a cooperation framework agreement on the construction of 500000 tons / year iron phosphate and 500000 tons / year lithium iron phosphate and related supporting projects around the whole industry chain of new energy lithium materials; on December 10, the two sides signed a "joint venture contract" to further promote cooperation in the field of lithium materials.

According to the announcement, Prospect Lithium owns 100% interest in Arcadia Lithium Mine in Zimbabwe, which is the main target of Huayou Cobalt's acquisition. The announcement shows that the Arcadia project has a lithium carbonate equivalent resource of 1.9 million tons, a lithium oxide grade of 1.06%, and has a good prospecting prospect. In the case of annual regular payment, there is no limit to the period of validity of the mining right.

According to the feasibility study report released in December, the Arcadia project has a construction period of 2 years and a production life of 18 years. Through gravity separation and flotation process, the annual output of 147000 tons of spodumene concentrate, 94000 tons of technical grade lithium feldspar concentrate, 24000 tons of chemical grade lithium feldspar concentrate and 0.3 tons of tantalum concentrate. At present, the project has obtained the environmental evaluation certificate of development and construction. The aforementioned company said that the company is currently working on a new feasibility study report for the Arcadia project.

It is worth mentioning that before Huayou Cobalt announced the acquisition, the Arcadia lithium mine has attracted the attention of many domestic institutions.

In April this year, Haitong Securities cited a feasibility study released by Prospect Lithium Mining Company in 2019 that the average FOB cash operating cost of lithium ore produced by Arcadia was US $344 / ton during the mining life cycle. This means that the cost of Arcadia lithium mine is lower than that of other lithium mines in the world.