With 16.8 Billion Cash In Hand, Zijin Mining Wants To Distribute Lithium, The Global Core Resources Have Been Divided Up, How Does The First Brother Of Nonferrous Metals Break The Situation

A radical view is that under the trend of carbon peak and automobile electrification, the strategic position of lithium resources is equivalent to "white oil".

There are more and more players who want to join this circle. Even Zijin mining, the "first brother" of the domestic nonferrous industry, can hardly restrain the impulse of "robbing for ore".

In an exclusive interview with the media on August 2, Chen Jinghe, chairman of Zijin mining, said, "the company will develop and layout lithium resources, plan to acquire some projects and mine assets in the future, and open up the whole industry chain from upstream to materials." On the same day, Zijin mining shares rose 5.46%.

However, the company immediately announced that "the layout of lithium and other new energy minerals is based on the preliminary strategic planning of the company, and there is no specific time schedule and specific project arrangement. So far, the company has not planned any specific projects. " On August 3, the share price fell again.

Although the acquisition of Chunxin has not been implemented yet, it shows that the current lithium assets are booming. Even Zijin mining, the first brother of nonferrous metals, can not be detached from the situation.

Taking the secondary market trend as an example, as of August 2, the average annual growth rates of lithium ore and salt lake lithium extraction plates reached 153% and 149% respectively, far exceeding those of cobalt ore, power battery and vehicle manufacturing in the same period.

Zijin mining, on the other hand, is well off thanks to the rising prices of gold and copper in the past two years. By the end of June this year, the balance of cash and cash equivalents of the company had reached 16.827 billion yuan, an increase of nearly 7.7 billion yuan over the same period of last year, and the "consumption" impulse increased accordingly.

However, even if Zijin Mining will pay "idea" to action in the future, it will also face no small challenge.

The "lithium triangle" in South America and the mines in Western Australia are occupied by Yabao of the United States and the "two giants of lithium industry" in China. A large number of local state-owned enterprises, central enterprises and listed companies have gathered in Qinghai Salt Lake and Western Sichuan lithium mines. The interest pattern has been very fixed.

Especially in the current situation of rising prosperity, which company will easily sell lithium assets?

The overall situation of the head lithium mine has been decided

The distribution of lithium resources in the world is very unbalanced.

According to the data of the U.S. Geological Survey and Guojin securities, the main forms of global lithium resources are salt lake, ore lithium and clay lithium, of which salt lake lithium resources account for 58% and lithium concentrate accounts for 26%.

In terms of salt lake resources, they are mainly distributed in Chile, Argentina and Bolivia in South America, while Australia is the largest lithium concentrate exporter in the world.

However, the above-mentioned high-quality resources have already been allocated and formed a "marriage" pattern that is hard to break.

First of all, salt lakes are mainly mined in Chile and Argentina, known as the "mirror of the sky". Due to the political situation and environmental protection of Bolivia, Uyuni has not yet been developed on a large scale and its production capacity is very limited.

The second largest salt lake in Chile is Atacama Salt Lake, which is jointly developed by Chile chemical and mining company (Tianqi lithium industry) and Yabao of the United States. Meanwhile, Yabao also owns the development right of 16700 hectares of Atacama Salt Lake in Chile.

The main salt lakes in Argentina are mainly owned by minera Exar of Argentina, orocabre, an Australian lithium miner, and Ganfeng lithium. Ganfeng lithium holds 88.75% of the equity of Mariana Salt Lake and 51% of the equity of minera Exar.

As for Australian mines, the greenbushes mine with the largest reserves, the highest grade and the lowest cost in Western Australia is owned by Tianqi lithium and Yabao.

MT Marion, second in the list, owns 50% of the shares and an exclusive right to sell the mine. Other major mines with a capacity of about 200000 tons are mainly owned by Australian companies such as Pilbara, Altura and galaxy.

It seems very clear that the main salt lake and mine resources are mainly concentrated in the hands of American Yabao, a lithium salt enterprise, and the "two giants of lithium industry" in China.

Among them, it also involves certain joint investment and shareholding relationship. For example, Atacama Salt Lake and greenbushes lithium mine, which are ranked first, have Tianqi lithium and Yabao.

In terms of domestic resources, China's total reserves account for about 6% of the world's total reserves, but resource development rights are mostly concentrated in the hands of "players in the circle", local state-owned enterprises and central enterprises.

The development enterprises of Qinghai Salt Lake include the salt lake shares under the state-owned assets of Qinghai Province, and the companies under the central enterprises CITIC and Minmetals; Western Sichuan lithium mine has gathered a number of local state-owned enterprises Sichuan energy investment, as well as Yahua shares, Rongjie shares and other listed companies.

It should be pointed out that under the background of the sharp increase in the demand for new energy vehicles, the construction of lithium ore with small development difficulty and high economic value has been accelerated and the production capacity has been released as much as possible. Many other non formed capacity are limited by certain objective factors, such as the lithium mine in Western Sichuan which has not achieved results for many years.

Under the above background, even if Zijin Mining takes a substantial acquisition in the future, it is difficult to obtain the top quality lithium resources. After all, the main players including Yabao, Tianqi lithium and Ganfeng lithium are the producers of lithium carbonate and lithium hydroxide in the downstream of lithium mine, and they have the demand to ensure the supply of raw materials.

In addition, the distribution of the above-mentioned core minerals is not achieved overnight, during which huge risks are taken. For example, Tianqi lithium's equity acquisition of sqm once caused the company to fall into a liquidity crisis. How can the high-quality assets saved by Tianqi lithium be sold easily?

Speculation on Zijin Mining's acquisition

For the plan to purchase lithium, Chen Jinghe explained that "now the energy structure is changing, a new round of electrification represented by new energy vehicles is in full swing, and the speed is extremely fast."

It is not an isolated case that traditional mineral giants are transforming to upstream minerals of new energy.

Rio Tinto, an Australian iron ore giant, recently announced that it will spend $2.4 billion to develop the jadar lithium borate project in Serbia, mainly producing battery grade lithium carbonate and borate, which can be used to produce solar panels and wind turbines.

In terms of the project cycle, the project is planned to be put into operation in 2026 and reach the maximum capacity in 2029. Obviously, the mining giants are looking for a longer-term energy revolution.

As Rio Tinto benefited from the rise in iron ore, Zijin Mining also accumulated a large amount of capital in the systematic rise of nonferrous metals in the past two years.

According to the data of Zijin Mining's semi annual report, as of the end of June, the "balance of cash and cash equivalents" representing short-term availability reached 16.827 billion yuan, which was only 9.139 billion yuan in the same period of 2020.

A year later, Zijin Mining's cash assets increased by nearly 7.7 billion yuan. With heavy gold in hand, Zijin mining follows the trend of the industry to invest in new energy upstream minerals.

Even if $10 billion is spent, it will be enough to acquire some relatively high-quality mining assets.

However, judging from the timing of acquisition, Zijin Mining is undoubtedly more than one beat behind. Now it is not the stage when lithium prices are low in 2019, and mines in Western Australia stop production and go bankrupt frequently.

Under the background of relatively fixed supply pattern of lithium resources in the head, Zijin mining industry will find it difficult to win the "core assets" of the salt lake and spodumene mines mentioned above. Moreover, in the current market environment, the premium of lithium, cobalt and other new energy minerals must not be low.

One way is that the company adopts the way of direct acquisition. The alternative directions include relatively high-quality lithium mineral assets in Canada and some African countries.

Among them, the grade of whabouchi and James Bay in Canada is up to 1.4%, and the reserves are both more than one million tons of lithium carbonate equivalent. In terms of grade and reserves, they are better than the domestic spodumene mines of Lijiagou and methylka.

Africa includes Manono in the Democratic Republic of Congo, Arcadia in Zimbabwe and goulamina in Mali. The first two companies are respectively Australian prospect resources and avz mining, and have signed long-term off take agreements with several domestic listed companies such as Ganfeng lithium and sinomine.

Zijin mining, on the other hand, has also carried out asset distribution in the above countries, such as kamoa kakula copper mine in the Democratic Republic of Congo.

As a foreshadowing, the subsequent acquisition of lithium assets from the local area may be easier to achieve.

The other way is to directly take shares in the lithium giant who has mastered the "core resources" through equity participation. Considering the capital situation of several leading enterprises and the previous acquisition style of Zijin mining, this kind of possibility is not likely.

Of course, Zijin Mining may end up fighting in an unexpected way in the future, but it is still unknown which mine will ultimately choose.

Perhaps, when Chen Jinghe gave the reply of "purchasing lithium mine", he already had a potential acquisition target in his mind.

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