The Surging News reporter Qin Yixiao
According to the Disclosure of the Hong Kong Stock Exchange on June 19, Tianqi Lithium Co., Ltd. (hereinafter referred to as Tianqi Lithium, 002466), a leading lithium mine, passed the hearing of the Hong Kong Stock Exchange, with Morgan Stanley, CICC and CMB International as joint sponsors. If the listing is successful, Tianqi Lithium will become the second lithium giant listed in "A+H" after Ganfeng Lithium.
Up to now, Tianqi Lithium has not disclosed the specific fundraising scale. According to the announcement on June 3, the China Securities Regulatory Commission approved Tianqi Lithium to issue no more than about 425 million overseas listed foreign shares, all of which are ordinary shares. It is reported that the funds raised by Tianqi Lithium will reach 1 billion to 1.5 billion US dollars in this IPO, which is expected to become the largest IPO of Hong Kong stocks this year.
Tianqi Lithium said at the performance briefing that in addition to expanding overseas financing channels, H-share issuance and financing is conducive to the company's further optimization of capital structure, reduction of leverage ratio and financial risks; It is also conducive to the company's further development of core business and plays an important supporting role in the capacity expansion plan.
According to the hearing information, Tianqi Lithium is a leading lithium producer in China and the world, integrating upstream lithium resource reserves, development and midstream lithium chemical products, and has been listed on the Shenzhen Stock Exchange since August 31, 2010. The company owns and mines lithium minerals in Australia and produces lithium compounds and derivatives in China. During the Track Record Period, the Company did not conduct any mining activities in China.
According to the prospectus, the net proceeds of the offering are intended to be used to repay the outstanding debts and related transaction costs owed by the loan SQM of The M&A of Chile Mining and Chemical, and to allocate funds and working capital for the construction of the first phase of the Anju plant. As of June 10, 2022, the outstanding principal amount of SQM debt was $1.13 billion.
In December 2018, Tianqi Lithium acquired a 23.77% Class A stake in Chilean lithium miner SQM for US$4.066 billion, becoming its second largest shareholder. At that time, the net assets of Tianqi Lithium were only 12 billion yuan. Of the acquisition funds, borrowings totaled US$3.5 billion (about RMB23.3 billion) from domestic and foreign syndicates.
In the case of lithium ore prices continuing to decline that year, this "snake swallowing elephant" type of high-leverage buyout left Tianqi Lithium with huge debts. In order to alleviate debt pressure, Tianqi Lithium submitted a listing application to the Hong Kong Stock Exchange in 2018, but due to the fact that the SQM production capacity income has not yet been realized, the global lithium mine price is low, and the company's annual profit has continued to lose money, the Hong Kong stock listing plan was finally suspended.
From 2016 to 2018, the net profit of Tianqi Lithium was 1.512 billion yuan, 2.145 billion yuan and 2.2 billion yuan, respectively. Although a net profit of 2.2 billion yuan was recorded in 2018, it increased by only 2.56% year-on-year, and the operating income fell by more than 50%. From 2019 to 2020, Tianqi Lithium lost 5.48 billion yuan and 1.125 billion yuan respectively. It was not until the rise in lithium prices in 2021 that it was able to turn losses into profits, achieving operating income of 7.663 billion yuan, an increase of 136.56% year-on-year, net profit of 2.079 billion yuan, an increase of 213.37% year-on-year, and an annual profit of 4.206 billion yuan.
In September 2021, Tianqi Lithium announced that it would once again launch a proposal to list in Hong Kong, and the funds raised would be used for existing debt repayment, capacity expansion and supplementary working capital after deducting issuance expenses. In January this year, after receiving the "Acceptance Form for Administrative Licensing Application of the China Securities Regulatory Commission", the Company formally submitted an application for issuance and listing to the Hong Kong Stock Exchange.
According to the Wood Mackenzie report, a subsidiary of Tianqi Lithium is the world's largest lithium mining operator with a market share of 38% in terms of lithium concentrate production in 2021. In terms of revenue generated by lithium in 2021, the company ranks third in the world. In terms of production in 2021, the Company is also the fourth largest producer of lithium compounds in the world and the second largest producer of lithium compounds in Asia, with a market share of 7% and 12% respectively. In addition, the Company is the only lithium producer in China to achieve 100% self-sufficiency and fully vertically integrated lithium ore through a large, consistent and stable supply of lithium concentrate.
Tianqi Lithium's integrated business model and production process cover the key links of the lithium value chain. With high-quality and low-cost lithium concentrate from the Greenbush Mine, the company is able to achieve self-sufficiency in lithium raw materials and efficiently produce high-quality lithium compounds and derivatives.
Tianqi Lithium's integrated business model and production process
In terms of products, The products of Tianqi Lithium are mainly divided into lithium concentrate products and lithium compounds and derivative products. Lithium concentrate products include chemical and technical grade lithium concentrates, while lithium compounds and derivatives include lithium carbonate, lithium hydroxide, lithium chloride and lithium metal. Products are widely used in end markets including electric vehicles, energy storage systems, air transportation, ceramics and glass.
In terms of customers, Tianqi Lithium's customer base includes top battery material manufacturers, multinational electronics companies and global glass producers. According to the Wood Mackenzie report, the company's products are supplied to three of the world's top five cell lithium-ion battery manufacturers and six of the world's top ten cathode manufacturers by market share in 2021.
In terms of production capacity, Tianqi Lithium currently has a lithium chemical product production capacity of 44,800 tons / year in the three production bases of Shehong, Jiangsu Zhangjiagang and Chongqing Tongliang, Chongqing Tongliang Production Base plans to expand the 2,000-ton metal lithium project in two phases, and the Sichuan Suining Anju 20,000-ton battery-grade lithium carbonate project is gradually resuming the construction rhythm, which is expected to be completed and debugged in the second half of 2023. The first batch of lithium hydroxide products from the 24,000-ton-per-year battery-grade lithium hydroxide project in Quinana, Australia, have now passed sampling tests in internal laboratories.
In terms of resources, Tianqi Lithium owns the Sichuan Yajiang Tsola Mine and the Greenbush Mine. According to the BDA report, the Yajiang Tsola Mine is part of a larger methylcarbonate lithium mine, which is considered to be the largest hard-rock lithium mine in China and even Asia. As of December 31, 2021, the mine had 632,000 tons of lithium resources for LCE.
According to the Wood Mackenzie report, the Greenbush Mine is the world's largest hard rock mine in terms of production and reserve size in 2021, and it is also the world's lowest-cost large-scale lithium mine. With the completion and commissioning of the tailings reservoir project with an annual capacity of 280,000 tons, Talison lithium concentrate capacity will be expanded from 1.34 million tons/year at the end of 2021 to 1.62 million tons/year.
At present, the total assets of Tianqi Lithium industry have reached more than 40 billion yuan, and the reserves of lithium resources have reached 16 million tons of LCE reserves. According to the financial report data, in the first quarter of 2022, the company achieved a total operating income of 5.257 billion yuan, an increase of 481.41% year-on-year, and a net profit of 3.328 billion yuan, up 14.4 times year-on-year.
With the continuous rise in global lithium prices, Tianqi Lithium's investment in SQM has finally paid off. According to Tianqi Lithium's previous announcement, SQM achieved a net profit of US$796.1 million in the first quarter of 2022, and the company's net profit in the first half of the year is expected to increase by about 620 million yuan.
Wind data shows that with the rise in the volume and price of lithium salt products, the company's debt situation has improved significantly, and the asset-liability ratio has dropped sharply to 58.90%. As of the end of the first quarter of 2022, Tianqi Lithium had total assets of 46.73 billion yuan, total liabilities of 24.23 billion yuan, and the asset-liability ratio was 51.85%, down 30.47 percentage points from the same period last year.
Source: Wind
Previously, there were market rumors that Tesla would participate in the subscription of Tianqi Lithium's Hong Kong stock IPO. In this regard, Tianqi Lithium responded that "everything is subject to the company's announcement", and Tesla responded that it is "unclear and has no information to disclose." ”
In April, Musk retweeted a tweet about a decade-long increase in lithium prices and publicly stated: "Lithium prices have risen to crazy levels." Unless cost pressures ease, Tesla may have to go directly into large-scale (lithium) mining and refining businesses. ”
Previously, Tesla has signed supply agreements with a number of lithium mining companies, and Musk's remarks have led the market to speculate whether Tesla will consider acquiring an established mining company.
It is understood that Tesla's lithium suppliers include Chinese lithium giant Ganfeng Lithium, and the two sides have cooperated since 2018 in the supply of battery-grade lithium hydroxide products, and renewed the order for the next three years in November last year. In the past six months, with the increase of battery production capacity, Tesla has reached supply agreements with Australian graphite supplier Syrah Resources and Australian lithium miners Liontown Resources and Core Lithium.
Editor-in-Charge: Li Yuequn