(Yicai Global) Dec. 26 -- Shares in GCL Energy Technology plunged by the exchange-imposed limit today before recovering after the Chinese provider of new energy services, which has started to expand upstream to secure the supply of raw materials, said it is teaming up with miner Zim-Thai Tantalum to develop a lithium mine in Zimbabwe.

GCL Energy’s stock price [SHE:002015] closed down 3 percent at CNY12.84 (USD1.86). Earlier in the day it sank to CNY12.04, an eight-month low.

Unit GCL Energy Technology Lithium Battery New Energy is linking arms with Zim-Thai Tantalum, which owns exploration rights in the southern African country, to develop a mining area that has estimated lithium oxide reserves of at least 500,000 tons, the parent firm said on Dec. 24, citing the agreement penned between the two parties on Dec. 23. Lithium is a key raw material used to make electric car batteries.

The first step is to evaluate the resources in the block, GCL Energy said. Exploration work will begin as soon as the Suzhou, eastern Jiangsu province-based company makes a down payment of USD3 million. The pair will then set up a joint venture to develop the block, in which GCL Energy will hold a 51 percent stake, it added.

For their partnership to take effect, the mining area must have minimum
lithium oxide reserves of 100,000 tons and the valuation of the project should be USD270 million, it said. The compensation method will be determined between the pair once the exploration is completed.

The collaboration will give GCL Energy an overseas source of lithium, improve its positioning in raw materials supply and enhance its integration in the lithium battery industrial chain, it said. The firm is also vying with battery giant CATL, for the restructuring right of a bankrupt lithium mine in Southwest China’s Sichuan province since last month.

Editor: Kim Taylor