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China-led Tianqi Lithium-IGO JV bids for Australian lithium developer Essential

Kitco News

SYDNEY, Jan 9 (Reuters) - Essential Metals shares rose about 40% on Monday after a joint venture headed by China's Tianqi Lithium made a A$136 million bid for the Australian lithium developer, setting up a major test of Australian regulators' appetite for Chinese-led foreign investment.

Tianqi Lithium Energy Australia (TLEA), which is 51% owned by Shenzhen- and Hong Kong-listed Tianqi Lithium Corporation and 49% by Australian miner IGO Ltd , set the bid at 50 Australian cents per share.

Essential Metals shares traded as high as 48.50 Australian cents, their highest price since Nov. 14, 2022 and the biggest intraday percentage gain since Oct. 15, 2021. The stock last traded at 47.50 Australian cents, up 37.7% on the day.

The bid was supported by Essential's board which recommended shareholders vote in favour of a deal. An independent expert's report on the offer will be delivered in March.

The deal requires the approval of Australia's Foreign Investment Review Board (FIRB) approval, with Treasurer Jim Chalmers having the ultimate say.

In November, Chalmers said Australia would become more assertive in who it allowed to invest in the country's growing critical minerals industry. Chalmers' office did not immediately respond to a request for comment on the deal from Reuters.

Political and business relations between Australia and China have eased in recent weeks following meetings between Australian Prime Minister Anthony Albanese and Chinese President Xi Jinping at a G20 summit in November and Australian Foreign Minister Penny Wong and her Chinese counterpart Wang Yi.

China's ban on Australian coal seems to be lifting. Reuters reported last week that China Energy Investment Corp had placed an order to buy the commodity from Australia in one of the first deals since 2020.

The bid for Essential was announced as companies race to capitalize on booming lithium prices and demand for the mineral, a key component of electric vehicle batteries, amid a global push to reduce carbon emissions.

Essential's portfolio includes the pre-development Pioneer Dome Project, located about 130 km (81 miles) south of Kalgoorlie in Western Australia. It has said it hopes to begin production there by 2025.

TLEA owns a 51% stake in the Greenbushes lithium operation and the Kwinana lithium hydroxide refinery in Western Australia.

The transaction is expected to be completed by May 2023.
($1 = 1.4535 Australian dollars) (Reporting by Scott Murdoch in Sydney, Jaskiran Singh and Riya Sharma in Bengaluru; Editing by Paul Simao)

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