Electric car sales are zooming ahead in China. Neither its slowing economy nor chip shortages have left a dent. A battery shortage, however, would be a different story. A local gold miner agrees, keen to produce the precious lithium needed for the batteries.
Zijin Mining’s all-cash $768m (C$960m) acquisition of Canada’s Neo Lithium might look steep for a company forecasting ebitda losses through 2022. It paid a reasonable 18 per cent premium, though its share price has more than doubled this year, an increase that has lagged behind the lithium price.
In the context of China’s world-leading electric car market, the purchase makes sense. New energy vehicle sales, both battery-powered and plug-in hybrids, rose 150 per cent last month from a year earlier. Overall auto sales fell by a fifth. Neo Lithium owns and mines some of the biggest lithium deposits in the world.