(Yicai Global) Aug. 31 -- Tianqi Lithium, one of China’s biggest lithium miners, reported an almost 12,000 percent increase in first-quarter profit from a year earlier, after lithium prices jumped and an investment paid off, and said it plans to buy back up to CNY200 million (USD29 million) of its own stock.

Net profit was CNY10.3 billion (USD1.5 billion) in the six months ended June 30, the Chengdu-based company said yesterday. Revenue soared 508 percent to CNY14.3 billion.

China’s lithium carbonate prices are up nearly 80 percent this year thanks to strong demand from the new energy vehicle sector as the country makes the shift to electric cars. Tianqi Lithium also attributed the profit surge to a CNY2.3 billion (USD332.6 billion) return on a 2018 investment in Chilean lithium miner SQM, in which it now has a roughly 22 percent stake. SQM earlier reported a 940 percent leap in its first-half net profit to USD1.7 billion.

Tianqi Lithium also unveiled a plan to repurchase between CNY136 million and CNY200 million of the firm’s shares for it employee stock ownership program. Buybacks remove some of a publicly traded company’s shares from the stock market, with the aim of boosting the price.

Tianqi Lithium paid USD4.1 billion for almost 24 percent of SQM, becoming its second-largest shareholder. The Chinese firm came up with USD726 million of that from its own coffers, with a further USD3.5 billion from loans. The high-leverage acquisition led to a significant increase in interest payments on the borrowing to about CNY1.7 billion in 2019.

Over the course of the past year, the company has been paring its liabilities by repaying bank loans with its own funds and those raised in a secondary stock listing in Hong Kong last month, from which it secured about HKD13.5 billion (USD1.72 billion).

Its gearing ratio dropped to about 28 percent at the end of July from 45.6 percent at the end of June and 58.9 percent at the end of 2021’s first half, the firm said.

Despite these announcements, shares of Tianqi Lithium [SHE: 002466] fell 1.2 percent in Shanghai today, amid a wider selloff in Chinese stock markets, to close at CNY114.24 (USD16.57) each. Its Hong Kong-listed stock [HKG: 9696] ended 2.3 percent lower at HKD82.55 (USD10.52).

Editor: Futura Costaglione