In a significant test of Australian regulators' willingness to accept Chinese-led foreign investment, a venture led by China's Tianqi Lithium made a A$136 million ($94.07 million) offer to purchase Australian lithium firm Essential Metals.
The bid was made by Tianqi Lithium Energy Australia (TLEA), which is owned 50% by the Shenzhen and Hong Kong-listed Tianqi Lithium Corporation and 49% by the Australian miner IGO Ltd.
The board of Essential endorsed the offer and advised shareholders to approve it. In March, a report on the offer from an impartial expert will be given.
The Foreign Investment Review Board (FIRB) in Australia must approve the deal, with Treasurer Jim Chalmers having the final decision. Australia would become more forceful in who it permitted to participate in the nation's expanding and crucial mining industry, Chalmers predicted in November.
"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 Reuters, adding they would not comment on specific deals.
Following meetings between Australian Prime Minister Anthony Albanese and Chinese President Xi Jinping at a G20 summit in November and between 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 embargo on Australian coal by China appears to be easing. In one of the first transactions since 2020, China Energy Investment Corp. made an order to purchase the commodity from Australia, according to Reuters last week.
The proposal for Essential was made public as businesses compete to profit from rising lithium prices and growing demand for the mineral, which is an essential part of batteries used in electric vehicles.
shares of Essential Metals rose up to 40%, reaching a high of 48.50 Australian cents. The stock was up 37.7% on the day as of its most recent trading at 47.50 cents.
The Hong Kong shares of Tianqi Lithium increased by as much as 5.2 percent.
The pre-development Pioneer Dome Project, which is 130 kilometres (81 miles) south of Kalgoorlie in Western Australia, is a part of Essential's portfolio. It has stated that it intends to start manufacturing there by 2025.
In Western Australia's Greenbushes lithium operation and Kwinana lithium hydroxide refinery, TLEA has a 51% ownership stake.