TIANQI LOOKS AT OFFLOADING EQUITY, ASSETS
Tianqi Lithium Corp, one of the world’s top lithium producers, has indicated it was exploring selling equity and assets, as well as bringing in strategic investors to address liquidity problems.
The Chinese company, which is set to post heavy losses in both 2019 and the first quarter of 2020 amid low lithium prices, made the comments in a filing to the Shenzhen Stock Exchange after reports it was looking to sell a stake in its Australian joint venture, Talison Lithium, to cut debt. In early April, the company announced that it expected to report a net loss of 450510m yuan ($64-72m) in the first quarter of 2020, compared with a net profit of 111.29m yuan in the corresponding period of 2019.
Chengdu-based Tianqi has been struggling to repay loans taken out to finance its high-profile $4.1b acquisition of nearly quarter of Chilean miner SQM - agreed in 2018 when prices for lithium, a key ingredient in batteries for electric vehicles, were much higher.
The company said its “liquidity pressure increased” in the fourth quarter of 2019 due to falling lithium prices, which are currently around two-thirds lower than they were two years ago, as well as rising financial expenses.
To address this, Tianqi is looking at the feasibility of various financing tools, including “the introduction of domestic and foreign strategic investors (and) the sale of assets and equity,” the filing said, without specifying what the company was prepared to divest.
Talison Lithium - in which Tianqi partners US-based Albemarle Corp - operates the Greenbushes lithium mine in WA, as well as the Kwinana processing plant which is supposed to produce battery-grade lithium hydroxide but has had its commissioning postponed.
Tianqi said it had not yet signed any legally binding agreement to sell assets or bring in a strategic investor.