Tomorrow Investor

Ganfeng Lithium Set to Face Intense Scrutiny


One of China’s most profitable lithium companies may be making a mint. Still, it isn’t immune to the increasing distrust faced by Chinese companies dealing with businesses in the West, as well as increasing restrictions on the part of its government back home.

Over the past several weeks, Ganfeng Lithium has been on the front page of the business papers as it is the focus of a government-initiated insider trading probe following its recent acquisition of mines in Argentina and the participation of one of its subsidiaries in a lithium exploration venture in the controversial region of Xinjiang.

In his opinion, Sam Jaffe, vice-president of battery storage solutions for industrial research firm E Source, feels that, while Ganfeng wants to explore its horizons overseas, the Chinese government wants to assert its influence over the company. This is because Ganfeng has become a player to look out for in the global lithium-ion battery production sector.

Currently, the company’s foreign clientele includes the likes of BMW, Tesla, and Volkswagen. However, company executives have declined to comment regarding the ongoing probe, nor have they mentioned details regarding the Xinjiang venture.

Allies and rivals

For his part, Alex Payette, CEO of China-based risk consultancy Cercius Group, pointed out that Ganfeng’s founder Li Liangbin has a reputation for keeping many high-ranking officials onside, considering how the company continues to reap the benefits of allying with some of President Xi Jinping’s political rivals. 

Payette remarked that, given the size of Ganfeng’s share of the global market and how vital lithium is to the Chinese economy, Beijing certainly wants to keep the status quo – provided that Li does not overstep the boundaries.

So much for neutrality

Others, however, feel that Ganfeng’s long-standing neutrality may not work now that the Chinese government has been tightening the noose, so to speak, to keep local players within its control.

One person who sees things this way is former Ganfeng supplier Joe Lowry who is a friend of Li’s. Lowry explains that Ganfeng will have to fight to retain its autonomy from the national government, but this would depend on how Beijing views its specific goals regarding battery production and meeting the needs of the electric vehicles sector. 

Indeed, it is possible that the government may ask Ganfeng to set aside its foreign clients and give top priority to local EV makers should there be a worsening of the current lithium shortage. Others speculate that Ganfeng may be the target of a hostile takeover by a government-owned mining corporation like Zijin MIning or a similar entity.

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