Lithium stocks are hot right now as the price of lithium reaches record highs. Two of the world's most prominent lithium companies are based in China. These are Ganfeng Lithium Company (OTCMKTS: GNENF), with a market cap of around $27bn, and Tianqi Lithium (SHE: 002466) which is worth around $22bn.
Ganfeng Lithium Company (OTCMKTS: GNENF)
Ganfeng Lithium Co., Ltd. manufactures lithium chloride, lithium fluoride, lithium carbonate, lithium hydroxide and lithium magnesium alloy.
The company is known for its strong capital discipline and a small but consistent dividend payout. Its future projects include the development of Cauchari-Olaroz in Argentina, Mariana in Argentina and Sonora in Mexico.
Ganfeng aims to reduce its CO2 emissions by 10% by 2025 vs. its 2019 level. Meanwhile, it is gradually moving from spodumene-based production to brine-based lithium carbonate production. According to commodities consultancy Roskill, this will help its ESG rating as brine projects typically have around 33% CO2 intensity of hard-rock lithium production.
Ganfeng's executive directors mainly comprise lithium industry veterans, while its independent directors come from various business backgrounds.
FactSet analysts consider Ganfeng stock a buy.
Tianqi Lithium (SHE: 002466)
Tianqi is the world's largest hard-rock lithium producer.
China's Tianqi specializes in lithium resource reserve, development, and lithium product processing. Tianqi's return on assets has been disappointing compared to peers, as has its capital management. Its acquisition of a 24% stake in lithium miner SQM stretched its net margin. The company used $3.5bn in borrowings to complete the deal. Its margins were further strained by its budget overextension on the Kwinana lithium hydroxide plant in Australia.
The Tianqi and Independence Group joint venture produced its first lithium hydroxide product at their Kwinana lithium hydroxide refinery in August 2021. This refinery is ramping up production to a capacity of approximately 24,000 tonnes a year.
Tianqi's lithium operations occur in Australia, China and Chile. Its SQM project in Chile has come under heavy criticism for causing water resource deprivation in the region.
Meanwhile, in China, its largest production base is heavily geared towards using natural gas to fuel production, which is preferable to coal-fired refineries from an emissions point of view.
89% of FactSet analysts consider Tianqi stock a buy.