Two Chinese Lithium Companies You Should Know About

By Kirsteen Mackay

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China is the world leader in lithium refining and China’s EV deliveries are projected to double to over five million sales in 2022. Ganfeng Lithium Company (OTCMKTS: GNENF) and Tianqi Lithium (SHE: 002466) are worth watching.

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.

Ganfeng Lithium Company (OTCMKTS: GNENF) stock price chart

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.

Tianqi Lithium (SHE: 002466) stock price chart

If you're interested in lithium stocks, why not check out our United Lithium report or top lithium companies to invest in.

And while you're here, why not read our in-depth reports on ESG investing and Healthcare investing. Or check out our 12 investing themes for 2022.

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Topics:
Lithium
Industries:
Materials
Industrials

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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