Zijin Mining Group Co., one of China’s largest and most influential mining giants, is intensifying its efforts to capitalize on the burgeoning lithium market through ongoing discussions to acquire a Chinese lithium producer. The company has entered talks to purchase shares in Zangge Mining Co. Ltd., a key player in China’s lithium sector, signalling its ambitious expansion strategy in the critical battery materials space.

Zijin, renowned for its dominant presence in copper and gold mining, aims to solidify its position in the lithium market, a sector experiencing immense growth due to the rise in electric vehicle (EV) demand and the global shift towards clean energy. Zangge, based in the mineral-rich Qinghai province, is primarily known for potash production but derives a significant portion of its revenue from lithium extracted from salt lakes in the region. With a market value approaching $6.4 billion, Zangge has quickly become a promising acquisition target, offering Zijin a strategic foothold in the fast-evolving lithium market.

The talks come at a time when lithium prices have experienced a dramatic downturn, slumping by nearly 90% since late 2022, which has adversely affected the financial performance of many lithium producers. Despite the market challenges, Zangge is eyeing ambitious growth, with plans to develop additional lithium brine projects in Tibet, where it is already a partner in Zijin’s Julong copper mine. This partnership further strengthens the synergies between the two companies, making Zangge a particularly attractive acquisition for Zijin.

Zijin’s chairman, Chen Jinghe, has steered the company through a period of rapid growth, transforming it into one of the world’s leading copper miners. The firm has leveraged a series of acquisitions over the past decade to diversify its portfolio and is now focusing on expanding its footprint in the lithium market. Zijin's goal is to significantly ramp up lithium production, aiming to reach an output of 300,000 tons by 2028. However, its current lithium output remains modest, and the company has faced delays in launching projects in Argentina and Tibet due to low prices and regulatory hurdles.

The potential acquisition of Zangge is poised to enhance Zijin’s lithium production capabilities, solidifying its position in a market projected to see decades of growth. While the deal is still subject to final approval and due diligence, Zijin’s move reflects its growing focus on securing a long-term supply of essential materials for the global energy transition.

If completed, the deal would mark a pivotal moment in Zijin’s strategy to diversify into the rapidly growing and lucrative lithium sector.