(Yicai Global) May 19 -- Chinese green energy firm GCL Energy Technology is engaged in a heated bidding war for control of a mining company that owns the rights to develop a lithium salt mine in southwestern China. As of this morning, the offer price had been driven up 159 times as industry heavyweights jostle to get their hands on the key raw material used to make electric car batteries amid a global shortage.

Creditor Chengdu Xingneng New Materials is auctioning off the 54.3 percent stake in the Dechenongba Lithium Mine held by bankrupt Yajiang Snowway Mining Development on JD.com’s judicial auction platform. As of 8.30 a.m. China time, offers had risen to CNY535 million (USD79 million) from the starting price of CNY3.35 million (USD495,800). The auction, which was supposed to be from May 16 to May 17, has overrun as bidding turns fierce.

Wuxi-based GCL Energy already holds 43 percent equity and 99 percent creditors’ rights in Snowway Mining and is now competing with around 20 other firms for a controlling stake, a company insider told Yicai Global. There is speculation that fertilizer maker Sichuan New Energy Power, engineering firm Sichuan Road & Bridge and lithium materials supplier Shenzhen Chengxin Lithium Group are among the bidders.

The asset is an extra-large lithium mine in the Jiajika spodumene mining area in Yajiang county, Sichuan province that covers 1.14 square kilometers and has estimated reserves of 24.9 million tons. Once developed, it is expected to have an output of 1 million tons per year. The appraised value of the exploration rights held by Snowway Mining was CNY974 million (USD114 million) as of June last year.

Snowway Mining first auctioned the stake in February 2020 at a starting price of CNY849 million (USD125.6 million) with appraised assets of CNY1.2 billion (USD180 million) but the auction was suspended due to legal reasons.

The starting price has now been greatly reduced to CNY3.35 million, as there are some uncertainties as to the validity of Snowway Mining’s exploration rights, a company insider told Yicai Global. According to the bankruptcy administrator, the rights expired on June 30, 2021 and although the firm is reapplying, there is no guarantee that the rights will be transferred to the new owner.

Snowway Mining bought the exploration rights to Dechenongba Quartzite Mine in June 2009. Four years later, it applied to expand the rights to include lithium and quartzite. It is unclear if it has been successful or not. Most lithium salt resources are located in South America while spodumenes are in western Australia. China’s spodumenes are mainly in Sichuan.

GCL Energy’s share price [SHE:002015] closed up 0.41 percent at CNY17.02 (USD2.52). Earlier in the day it surged as much as 7.7 percent to CNY18.

Editor: Kim Taylor