(Yicai) Nov. 19 -- Shares in Chengxin Lithium Group remained lackluster today, even though the leading Chinese lithium miner and lithium salt producer said yesterday that it is preparing to sign a long-term supply agreement with a future strategic investor that could be worth up to CNY17 billion (USD2.4 billion).

Chengxin Lithium's stock price [SHE:002240] swung throughout the day and at one point dipped below yesterday’s close. It ended the day up 1.9 percent at CNY38.12 (USD5.36).

The share price has surged around 43 percent since the Shenzhen-based firm said late last month that Huayou Holdings, a major producer of ternary cathode materials, would take a 6 percent stake. Yesterday it hit its highest point since early February 2023 during trading. However, Huayou has not yet completed the investment procedures.

Huayou has agreed to buy 221,400 tons of lithium salt products over the next five years, Chengxin Lithium said yesterday, citing the cooperation framework agreement that is ready to be signed by the two parties. The two sides will negotiate actual transaction prices based on prevailing market rates.

Based on today's benchmark market price for battery-grade lithium hydroxide as given on industry website 100ppi, the framework contract could be worth CNY17.2 billion, according to Yicai’s rough calculations. If calculated using the benchmark price of another lithium salt, lithium carbonate, the total value could be around 16 percent higher.

Lithium hydroxide is a key raw material used to make high-nickel ternary cathode materials. Huayou Cobalt, the core subsidiary of Tongxiang-based Huayou, is a global giant in the mining and processing of upstream raw materials for ternary lithium batteries, such as cobalt and nickel compounds. It is also one of the world’s major suppliers of high-nickel ternary cathode materials.

Chengxin Lithium operates lithium mining and lithium salt processing facilities around the world. As of the end of June, it had a total annual production capacity of 137,000 tons of lithium salts, which includes 60,000 tons in Indonesia, according to the company's latest semi-annual report. Huayou Cobalt runs a high-nickel ternary cathode material plant in Indonesia.

Editor: Kim Taylor