In a major test of Australian regulators' appetite for Chinese-led foreign investment, a venture led by China's Tianqi Lithium made a A$136 million ($94.07 million) bid to buy Australian lithium developer Essential Metals.
Tianqi Lithium Energy Australia (TLEA), which is 51% owned by Tianqi Lithium Corporation of Shenzhen and Hong Kong and 49% owned by Australian miner IGO Ltd, set the bid at 50 Australian cents per share.
The bid was supported by Essential's board, which advised shareholders to vote in favour of the transaction. In March, an independent expert report on the offer will be delivered.
The agreement must be approved by Australia's Foreign Investment Review Board (FIRB), with Treasurer Jim Chalmers having final say. Chalmers stated in November that Australia would become more assertive in who it allowed to invest in the country's expanding critical minerals industry.
"The Australian government reviews foreign investment proposals on a case by case basis to ensure they are not contrary to the national interest," a spokesperson for the Treasurer told sources, adding they would not comment on specific deals.
Following meetings between Australian Prime Minister Anthony Albanese and Chinese President Xi Jinping at the G20 summit in November, and Australian Foreign Minister Penny Wong and her Chinese counterpart Wang Yi, political and business relations between Australia and China have improved in recent weeks.
The Chinese ban on Australian coal appears to be lifting. Last week, Reuters reported that China Energy Investment Corp had placed an order to purchase the commodity from Australia, in one of the first transactions since 2020.
The bid for Essential comes as companies race to capitalise on soaring lithium prices and demand for the mineral, which is a key component of electric vehicle batteries, as part of a global effort to reduce carbon emissions.
Essential Metals' shares increased by up to 40% on Monday, reaching a high of 48.50 Australian cents. The stock was last trading at 47.50 cents, up 37.7% on the day.
Tianqi Lithium's Hong Kong shares increased by up to 5.2 percent.
The Pioneer Dome Project, located about 130 kilometres (81 miles) south of Kalgoorlie in Western Australia, is part of Essential's portfolio. It has stated that it hopes to start production there by 2025.
TLEA owns 51% of the Greenbushes lithium mine and the Kwinana lithium hydroxide refinery in Western Australia.