(Bloomberg) -- China Minmetals Corp. will take control of a province-backed lithium company in a bid to speed development of a “world-class” industry extracting the battery material from salt lakes in the far west of the country.
The sprawling mining-to-trading group backed by China’s central government will hold 53% of a new joint venture, China Salt Lake Group, which will in turn take over Qinghai Salt Lake Industry Co., the latter firm said in an exchange statement. The new company’s registered capital will be 10 billion yuan ($1.4 billion).
The restructuring has been under discussion since at least April, and suggests a move by the central government to push for a bigger role in building out a key part of the domestic lithium sector. Qinghai province, covering a vast sweep of northwestern China, hosts many of the country’s lithium-bearing salt lakes.
The Minmetals takeover will “accelerate construction of a world-class salt lake industry base,” said Qinghai Salt Lake, which is currently controlled by provincial authorities. Its shares rose more than 8% after the announcement.
The global lithium industry is going through a turbulent phase with prices crashing amid a deepening supply glut. Still, much more production will be needed in coming decades to support demand from batteries for electric vehicles and energy storage.
The remainder of China Salt Lake Group, besides Minmetals’ controlling stake, will be held by two Qinghai government entities.
©2024 Bloomberg L.P.