(Yicai Global) May 23 -- An individual bidder has won the exploring rights to a lithium mine in Sichuan province in an online auction, beating large companies like GCL Energy Technology and Sichuan New Energy Power.

The bidder, named Tan Wei, offered CNY2 billion (USD300 million), 597 times the starting price of CNY3.35 million (USD502,500), for a 54.3 percent stake in bankrupt Yajiang Snowway Mining Development, which owns Dechenongba Lithium Mine. The stake was previously held by Chengdu Xingneng New Materials, which sold it on JD.Com’s auction platform.

The five-day-and-night auction attracted more than 970,000 witnesses and 21 registered bidders, ending on the morning of May 21.

“Who is Tan Wei?” became a hot topic after the auction, with speculation that the bidder might be connected to a small enterprise with registered capital of CNY50 million (USD7.5 million).

The asset is an extra-large lithium mine in the Jiajika spodumene mining area in Yajiang county, Sichuan province. It 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 Yajiang Snowway Mining was CNY974 million (USD114 million) as of June last year.

Another of the bidders, Chinese green energy firm GCL Energy Technology, already holds 43 percent equity and 99 percent creditors’ rights in Snowway Mining.

Snowway Mining first auctioned the stake in February 2020 at a starting price of CNY849 million (USD125.6 million) but the auction ran into legal problems and was suspended. The starting price was later cut to CNY3.35 million, as there was uncertainty about the validity of Snowway Mining’s exploration rights, a company insider told Yicai Global.

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, but it is unclear if it was successful or not.

There is expected to be a substantial increase in global lithium supply next year, and from 2023 to 2025 the supply will exceed the demand, triggering a drop in price, according to a research report by China Merchants Bank. Some insiders have suggested that Tan may yet regret his success in the auction.

There has been speculation that fertilizer maker Sichuan New Energy Power, engineering firm Sichuan Road & Bridge and lithium materials supplier Shenzhen Chengxin Lithium Group were also among the bidders.

Editor: Tom Litting