Chinese Lithium Firm Falls Flat at HK Debut

Tianqi Lithium

While lithium is currently the hottest commodity in the stock market, China’s Tianqi Lithium Corporation fell flat during its debut on the Hang Seng Index on Wednesday, July 13th.

According to analysts, Tianqi’s tepid first-day performance was proof that most investors balk at putting their money into just-listed stock. It also cast a pall over other large-scale offerings, including that of the China Tourism Group Duty Free Corporation, which are set to make their debut in the exchange in the coming weeks. Indeed, China Tourism, considered one of the world’s biggest travel retailers, is slated to sell as much as US$3 billion in shares.

But while Tianqi finished flat on its first day, it has nevertheless gained the interest of several potential investors, including South Korea’s LG Chem Ltd. and Chinese battery maker CALB.

Along with Tianqi, three other first-time listers did not perform as well as expected in the Hong Kong exchange. These were natural gas distributor Huzhou Gas Company, retail company Miniso Group Holding, and Noah Holdings Ltd., a wealth and asset management firm.

Earlier in the same week, Tianqis share price on the Shenzen exchange took a plunge as investors raised concerns regarding its valuation.

Rising From the Ashes

Despite its less than stellar debut, Tianqi’s Hong Kong listing is seen as a shot in the arm for the company recovering from a recent debt crisis.

Barely two years ago, the lithium producer found itself in a bind when it came close to defaulting on nearly $1.88 billion in debts caused by over-acquisition on the part of its management team.

However, the increased demand for lithium by the electric vehicle industry and other industries shifting to green power has given Tianqi a well-needed shot in the arm. Likewise, the surge of up to 1,000% in the price of lithium in the global market has helped ease the company onto sounder financial footing.

In May this year, Tianqi’s lithium refinery in the Kwinana region of Australia delivered its first batch of battery-grade lithium hydroxide. The Kwinana facility is a joint venture with Australian mining firm IGO Limited.

While Tianqi processes its lithium into compounds and derivatives at its facilities in China, the bulk of its raw materials is mined in Australia. The company aims to amply boost its refining capacity to more than double its current rate of 45,000 tons over the next three years.