On October 7th, the two lithium mining giants in the Hong Kong stock market showed strong activity. As of press time, Tianqi Lithium (09696.HK) surged by 10.81%, trading at 32.8 Hong Kong dollars per share, with a market value of 53.83 billion Hong Kong dollars. Ganfeng Lithium (01772.HK) jumped by 10.86%, trading at 27.05 Hong Kong dollars per share, with a market value of 54.56 billion Hong Kong dollars.

In terms of news, Rio Tinto (RIO.US) stated in a release on Monday that it has made an acquisition proposal to the New York-listed Arcadium Lithium, but it is uncertain whether an agreement can be reached.

Arcadium Lithium is considered one of the top-ranked lithium mining companies globally, with a current market value of about 3 billion US dollars. There are reports suggesting that the final acquisition price could be between 4 and 6 billion US dollars, which is naturally a drop in the ocean for global mining giants.

Citi previously advised Rio Tinto to acquire Arcadium Lithium in July. Citi analyst Paul Taggart wrote at the time that the miner's stock price was "far below replacement value," and the acquisition cost was lower than establishing a new portfolio of high-quality lithium assets. Taggart said, "For companies seeking scale, cost (brine), and chemical expertise, purchasing Arcadium may be more economical than trying to discover and develop chemical capabilities."

Advertisement

If Arcadium Lithium can join a "powerhouse," it would further improve the competitive landscape of the global lithium mining industry. As of press time, during the night trading session on October 7th Eastern Time, Arcadium Lithium (ALTM.US) shares surged by 30.19%. Perhaps driven by the significant rise in Arcadium Lithium's stock price, lithium concept stocks such as Chilean Mining Chemical and Albemarle in the United States recorded varying degrees of stock price increases during the night trading session.

Some investors believe that the gap-up surge in the stock prices of the two lithium mining giants today is more or less related to the global lithium industry concept stock rally.

Additionally, during the National Day holiday, the Hong Kong stock market showed strong momentum. Driven by overseas interest rate cuts and a series of significant domestic policies, many blue-chip stocks "danced like elephants." Tianqi Lithium and Ganfeng Lithium, as core assets of new energy, naturally attracted institutional pursuit (for example, at the end of September, Morgan Stanley increased its stake in Ganfeng Lithium by over 2 million shares), and the market sentiment was optimistic.

From September 23rd to the present, the cumulative increase in the stock prices of the two lithium mining giants has been about 60%, seemingly showing signs of emerging from a low point.

It is worth noting that according to data from Shanghai Steel United, the average quoted price for domestic battery-grade lithium carbonate in the last week of September was 75,800 yuan per ton. This year, the price per ton of lithium carbonate has always maintained a "low operation," especially in the second half of the year, basically hovering below 80,000 yuan per ton.Although from an industrial perspective, lithium prices have not yet emerged from a state of depression, some industry insiders believe that in the last lithium cycle, lithium resource stocks bottomed out before lithium prices. This round of lithium cycle may repeat this phenomenon.

Research reports from some institutions point out that the current lithium prices have already fallen below the cash costs of some high-cost suppliers. Even if lithium prices have not yet bottomed out, the overall downward space is also very limited. In the context of low prices, high-cost production capacity will gradually be eliminated. After the upstream production capacity is cleared out, lithium prices are expected to rebound, and the performance and valuation of related companies are also expected to gradually rise.

Data shows that the performance of the two lithium giants was under pressure in the first half of the year, and life was "tight". Among them, Ganfeng Lithium achieved a revenue of 9.589 billion yuan in the first half of 2024, a year-on-year decrease of 47.16%, and a net loss attributable to the mother company of 760 million yuan; Tianqi Lithium achieved a revenue of 6.419 billion yuan in the first half of 2024, a year-on-year decrease of 74.14%, and a net loss attributable to the mother company of 5.206 billion yuan, also turning from profit to loss year-on-year.

When the two companies can truly reverse the downturn has always been the focus of capital market attention, and investors are waiting and seeing.