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Block Chinese takeover of lithium miner, ministers told

·3-min read
Bacanora
Bacanora

A Chinese takeover of one of Britain's only listed lithium miners poses a threat to the national interest and must be stopped by ministers, MPs and shareholders have said.

Jiangxi-headquarted Ganfeng Lithium is on the cusp of securing enough support from investors in Bacanora Lithium to take control of the London-based business for £285m.

But opponents warned the plans risk giving Communist China even greater control over production of lithium, a highly sought-after element used in electric car batteries which is vital for the green revolution.

Chinese companies already own about 90pc of rare earth mines around the world and manufacture 80pc of lithium ion batteries.

A government source said ministers are monitoring the deal and that they could choose to intervene at a later stage, although nothing is expected imminently.

Sir Iain Duncan Smith, the former leader of the Conservative Party, demanded action.

“Ministers need to call this in. They have too often been asleep on the watch,” he said.

“These are strategic industries and there is nothing more strategic now than rare earth materials, which are the oil of the 21st century.

“China has been snapping up reserves all over the world. We need to ensure this deal does not further increase the power of the undemocratic, dictatorial regime in Beijing.”

Ganfeng, which is listed in Shenzhen, said on Monday it had received support for the takeover from 72.9pc of shareholders. This includes the 28.9pc stake it already owned.

The company needs 75pc of shareholders to agree to the takeover by the end of the year in order for it to delist Bacanora from London’s Aim market.

The deal is being opposed by a group of 500 minority investors in Bacanora with 8pc of shares between them, who argue it would allow Ganfeng to “corner the entire lithium space”.

It must also secure approval from competition regulators in Mexico, where Bacanora's mines are located.

The takeover is going ahead despite government efforts to secure lithium supplies as part of efforts to build a domestic battery production industry. This has included part funding Cornish lithium production and building an extraction site.

Dawood Patel, who has been leading shareholder action against the Bacanora deal, said: “The UK Government seems to think Cornish lithium will solve all of our problems, but that is barely a third of what they will need.”

Sam Armstrong of the Henry Jackson Society called on the government to investigate the deal under the upcoming National Security and Investment Act, which gives ministers greater powers to block takeovers on security grounds.

“For the government, to do anything less than call-in this takeover would be a dereliction of its duty," he said.

It is understood that Ganfeng has already agreed to acquire 75pc of lithium produced by the second phase of Bacanora’s Mexican mine, with the first phase going to Japanese business Hanwa.

Bacanora declined to comment. Ganfeng did not respond to a request for comment.

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