(Yicai) Aug. 14 -- Two lithium mines in Sichuan province have been bought for sky-high prices at auction, even though China’s lithium salt prices have been trending downward amid concerns about oversupply.

Anhui Dazhong New Energy Investment, a wholly owned subsidiary of Inner Mongolia Dazhong Mining, won the exploration rights yesterday to the Jiada lithium mine for CNY4.2 billion (USD579 million), the parent company announced today. The starting price had been CNY3.2 million. 

The mine’s reserves are not yet known, but Dazhong Mining said that according to a report prepared by the Geochemistry Exploration Team of the Sichuan Bureau of Geology and Mineral Resources, the mine potentially has ore resources of 29.67 million tons to 47.16 million tons, including inferred resources of 370,000 tons to 600,000 tons of lithium oxide.

Founded in 1999, Dazhong Mining’s core businesses is iron ore beneficiation, iron ore concentrate and pellet production and sales, as well as machine-made sand and gravel processing and sales. The company began to invest heavily in the lithium resources sector in October 2022.

Sichuan Energy Investment Holding won the other auction on Aug. 11 for the exploration rights to the north Lijiagou lithium mine in Jinchuan county, Sichuan for CNY1 billion, more than 1,700 times the starting bid price of CNY570,000 (USD78,578), the province’s public resource trading platform announced.

The Lijiagou spodumene deposit is part of the rare metal ore field in the Ke’eryin area, where lithium oxide resources have been recorded at 1.6 million tons, with total ore resources of 125.2 million tons.

Established in 2017, Sichuan Energy Investment is a wholly owned unit of Sichuan Energy Investment, a state-owned investment firm that has played a key role for the southwestern province in promoting the construction of energy infrastructure.

The demand for lithium carbonate is expected to remain strong in the long-term given the scale of the global electric vehicle battery market, and relatively few lithium mining sites are for sale in China, said Wu Yonggao, senior partner at Jincheng Tongda & Neal, The Paper reported today.

That partly explains the high prices paid for the two Sichuan mines, Wu said, adding that it is also risky to invest in offshore mining, so the competition for domestic lithium resources is generally fierce.

The distribution of spodumene in Sichuan is concentrated, with ores at high grades of between 1.30 percent and 1.42 percent, comparable with Australian lithium ore grades, Guosen Securities said in a research report. But it is hard to explore for lithium in Sichuan, given the tough local natural conditions.

Editor: Tom Litting