With the rapid worldwide development of new energy vehicles, demand for lithium has been soaring. Chinese companies, like their global peers, have been scrambling to accumulate bigger reserves of core raw minerals in recent years in order to lower the high cost of NEVs.

Zijin Mining Co, one of China's biggest gold and copper producers, said it would buy Canada's Neo Lithium Corp for 4.94 billion yuan ($737.14 million), as part of its efforts to further expand mining resources abroad.

This comes after Chinese battery maker Contemporary Amperex Technology Co Ltd last month agreed to acquire Canada's Millennial Lithium Corp in an all-stock cash deal worth $302.33 million to help the battery giant secure key resources for its long-term development of NEVs.

Last year, CATL also purchased more than 10 million shares of Neo Lithium Corp and became the company's third largest shareholder.

Acquisitions and investments are essential for Chinese companies to ensure supply and solve the high cost of NEVs, a major bottleneck to achieving faster development, said Cui Dongshu, secretary-general of the China Passenger Car Association.

Zijin has agreed to acquire all of the shares of Neo Lithium for C$6.50 ($5.22) per share in cash. The purchase comes after the company's announcement in July of its plan for lithium and other new energy minerals as part of its preliminary strategic planning and the transaction is expected to be completed by the first half of 2022.

"Neo Lithium's Tres Quebradas lithium brine project in Catamarca, Argentina, is one of the largest and highest-grade projects of its kind in the world. It represents an important addition to Zijin's growing global asset mix and is also a good choice for Zijin to enter the field of new energy minerals," said Chen Jinghe, chairman of Zijin.

"We are confident that together with Zijin's strong financial resources and mining know-how, we will develop this excellent asset into one of the world's leading lithium carbonate producing mines," Chen said.

With 92 percent of lithium resources scattered abroad, it is necessary for Chinese firms to seek the resource overseas.

An analyst said Zijin Mining has been acquiring offshore assets to boost its output and diversify from gold operations in recent years, and its acquisition of lithium shows the company's move to new energy materials in order to benefit from the strong growth of electric vehicles.

"As one of China's largest gold producers, it has bought gold mines to lift its gold output, and also diversified from gold to be the largest mined-copper and mined-zinc producer in China now," said Zhu Yi, senior analyst of metals and mining at Bloomberg Intelligence.

"The company will continue to focus on M&A opportunities and commissioning new capacity to drive up its production volume of gold and copper, according to its five-year plan ending 2025 that was announced in January," Zhu said.

The China Nonferrous Metals Industry Association said nearly 60 percent of the country's spodumene crystal has to be imported from abroad to produce lithium salts used in the manufacture of NEV batteries.

The company's output of mined-gold could rise 100-125 percent between 2020 and 2025, with mined-copper output potentially increasing 117-139 percent. Gold business accounted for 61 percent of Zijin's 2020 revenue, followed by copper at 19 percent, Zhu said.

Zijin said earlier that it would further expand mining resources abroad, which will be the mainstay of the company's development.

Zijin's overseas investment strategy took effect in 2005 when the company forged a cooperation agreement with Mwetaung mine for exploring nickel and other minerals in Myanmar. The company later invested in mineral-rich assets through mergers and acquisitions in Canada, Russia, Vietnam, Peru and elsewhere.

Founded in 2000, Zijin explores and mines gold and other nonferrous materials such as zinc and lead.

Source: China Daily

• [Editor:黄硕]