SYDNEY :A venture headed by China’s Tianqi Lithium made an A$136 million ($94.07 million) bid to buy Australian lithium developer Essential Metals, in a big test of Australian regulators’ appetite for Chinese-led foreign investment.
Tianqi Lithium Energy Australia (TLEA), which is 51 per cent owned by Shenzhen- and Hong Kong-listed Tianqi Lithium Corporation and 49 per cent by Australian miner IGO Ltd, set the bid at 50 Australian cents per share.
The bid was supported by Essential’s board which recommended shareholders vote in favour of a deal. An independent expert’s report on the offer will be delivered in March.
The deal requires the approval of Australia’s Foreign Investment Review Board (FIRB), with Treasurer Jim Chalmers having the ultimate say. In November, Chalmers said Australia would become more assertive in who it allowed to invest in the country’s growing critical minerals industry.
“The Australian government reviews foreign investment proposals on a case by case basis to ensure they are not contrary to the national interest,” a spokesperson for the Treasurer told Reuters, adding they would not comment on specific deals.
Political and business relations between Australia and China have eased in recent weeks following meetings between Australian Prime Minister Anthony Albanese and Chinese President Xi Jinping at a G20 summit in November and Australian Foreign Minister Penny Wong and her Chinese counterpart Wang Yi.
China’s ban on Australian coal seems to be lifting. Reuters reported last week that China Energy Investment Corp had placed an order to buy the commodity from Australia in one of the first deals since 2020.
The bid for Essential was announced as companies race to capitalise on booming lithium prices and demand for the mineral, a key component of electric vehicle batteries, amid a global push to reduce carbon emissions.
Essential Metals’ shares surged as much as 40 per cent on Monday, trading as high as 48.50 Australian cents. The stock last traded at 47.50 cents, up 37.7 per cent on the day.
Tianqi Lithium’s Hong Kong shares rose as much as 5.2 per cent.
Essential’s portfolio includes the pre-development Pioneer Dome Project, located about 130 km (81 miles) south of Kalgoorlie in Western Australia. It has said it hopes to begin production there by 2025.
TLEA owns a 51 per cent stake in the Greenbushes lithium operation and the Kwinana lithium hydroxide refinery in Western Australia.
It expects the Essential Metals deal to be completed by May 2023.
($1 = 1.4457 Australian dollars)
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