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Chengdu Tianqui Proposes Talison Bid to Trump Rockwood

Updated on

Chengdu Tianqi Industry Group Co., a closely held Chinese battery maker, said it will make an offer for Australian mining company Talison Lithium Ltd. that will exceed an agreed takeover bid from Rockwood Holdings Inc.

Chengdu Tianqi’s Windfield Holdings unit agreed to buy or has already purchased an aggregate 15 percent stake in Talison, the Chengdu, Sichuan province-based company said yesterday in a statement. Chengdu Tianqi plans to submit a proposal for the rest of the shares at a higher price than Rockwood’s bid of C$6.50 ($6.50) a share, according to the statement.

Talison, based in Perth, Australia, mines ore to produce battery-grade lithium, which analysts at Dahlman Rose & Co. say may double in demand during the next eight years on its use in electric vehicles. Talison has the largest open-pit mine for lithium with the highest grade ore in the world, according to Jonathan Lee, an analyst at Toronto-based Byron Capital Markets Ltd. Chengdu Tianqi purchases more than 90 percent of its lithium raw material from Talison, he said.

“It’s basically vertical integration for them and securing their source of supply,” Lee said in a telephone interview yesterday.

Talison rose 7.9 percent to C$6.96 in Toronto yesterday.

Talison dominates the market for technical-grade lithium used in the glass and ceramics industries, he said. Tianqi is the only distributor of Talison’s technical-grade lithium in China, according to the statement.

Australian Approval

“There’s a limited number of competitors in that space that are vastly smaller than Talison,” Lee said.

Talison said yesterday in a statement it hasn’t received a proposal from Chengdu Tianqi and recommends shareholders vote for Rockwood’s bid. A voicemail message left with Princeton, New Jersey-based Rockwood wasn’t immediately returned.

Talison will be able to grow its business and continue its track record of innovation and development in Australia, Joshua Goldman-Brown, a spokesman for Chengdu Tianqi from public relations company Kreab Gavin Anderson, said yesterday in an interview.

A takeover by Chengdu Tianqi would have to be approved by Australia’s Foreign Acquisitions and Takeovers Act and may be blocked because of the uniqueness of Talison’s resources, Lee said. Goldman-Brown declined to comment on the details of the approval process.

Chengdu Tianqi, which also makes agricultural machinery, owns a 20 percent stake in Quebec City-based exploration company Nemaska Lithium Inc., according to a Nov. 1 statement from Nemaska.

Separately, Toronto-based Canada Lithium Corp. said yesterday it agreed to a five-year agreement to supply China’s Tianjin Products and Energy Resources Development Co. with 12,000 metric tons of battery-grade lithium carbonate annually.

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