(Yicai Global) July 29 -- Tianqi Lithium advanced as much as 1.4 percent today after China’s biggest lithium extractor said that it has used the funds raised from its secondary listing in Hong Kong earlier this month to settle a USD1.1 billion loan.

Tianqi Lithium’s stock price [SHE:002466] closed down 0.2 percent at CNY115.50 (USD17). Earlier in the day it edged up to CNY117.45. The Shenzhen Composite Index slid 1 percent. The firm's Hong Kong-traded shares [HKG:9696] dipped 0.7 percent to finish the day at HKD80 (USD10).

Tianqi Lithium raised HKD13 billion (USD1.6 billion) when it went public in Hong Kong on July 13. The use of the funds to pay off the debt will not affect its operations, nor harm the interests of the company and its shareholders, especially the smaller ones, the Chengdu, southwestern Sichuan province-based company said yesterday.

Tianqi Lithium took out a USD3.5 billion syndicated loan in 2018 when it purchased 23.7 percent equity in Chile’s Sociedad Quimica y Minera, the world’s biggest lithium producer. The plunging price of lithium, however, meant it was unable to pay off its dues. Its stock price crumbled by over two-thirds in 2019 and interest payments that year amounted to USD1.6 billion (USD245 million).

HKD8.8 billion of the proceeds from the listing will be used to repay the debt and the rest will go towards expanding capacity and supplementing working capital, the firm said last year. Tianqi Lithium’s asset-liability ratio exceeded 80 percent in 2019 and 2020, according to its financial reports.

Editor: Kim Taylor