Narrative
Full Description
Project narrative
On December 6, 2012, privately-held Chinese company Chengdu Tianqi Industry (Group) Co., Ltd. announced that its wholly-owned subsidiary Windfield Holdings Pty Ltd had entered into a definitive agreement with Talison Lithium Limited — an Australian lithium producer — to acquire all of the shares in Talison that it did not already own for a cash consideration of $7.50 CAD per share, or $847 million CAD in total. To finance this acquisition, Tianqi sought to use its existing cash and acquire new debt financing; at the time, it had received commitment letters and was negotiating binding loan agreements. Prior to the acquisition, Tianqi held about 19.9% of the issued shared capital of Talison. Then, prior to February 25, 2013, the Industrial and Commercial Bank of China (ICBC) entered into a $120 million USD loan agreement with Tianqi and one of its wholly owned subsidiaries to support the acquisition. Tianqi also entered into a $200 million USD loan agreement with Credit Suisse AG and a $50 million USD loan agreement with Twenty Two Dragons Ltd, a company owned by Hong Kong-based investment firm ADM Capital. Tianqi and Windfield also entered into an agreement with Leader Investment Corporation, a subsidiary of China Investment Corporation (CIC) under which CIC, through Leader, committed to fund Windfield with about $300 million CAD in long-term equity to support the acquisition in exchange for an approximately 35%, non-controlling equity interest in Windfield. Tianqi provided a $25 million USD in cash to support the acquisition; these funds summed together covered the cost of the outstanding ~80% shares in Talison. The acquisition was completed in March 2013. After shortly after its completion, Sichuan Tianqi Lithium Industries Inc (Tianqi Lithium) entered into an agreement with Chengdu Tianqi Industry to acquire a 65% acquisition in Talison for RMB 3.68 billion ($646 million AUD); CIC held the remaining 35% of shares. At the time of the acquisition, Talison operated the Greenbushes lithium mine in Western Australia and owned the Salares 7 lithium brine project in northern Chile; in 2011, it produced over 350,000 tons of lithium product. It was publicly traded on the Toronto Stock Exchange.
Staff comments
1. Talison Lithium Pty Ltd (Talison Lithium) is the world’s leading lithium minerals concentrate producer, supplying product for the clean energy revolution. It is a private company that is jointly owned by Tianqi Lithium Corporation / IGO Limited JV (51%) and Albemarle Corporation (49%). Talison Lithium and its predecessor companies have been producing lithium at Greenbushes since 1983 and the area is recognized as containing the world’s highest grade and largest hard rock deposit of the lithium mineral spodumene. Greenbushes is also the longest continuously operated mining area in Western Australia following the discovery of tin in 1888 and subsequent development of tantalum and lithium deposits. 2. It is unclear with subsidiary entered into a loan agreement with ICBC alongside Tianqi. "Talison Lithium-Update on Tianqi Transaction", the source for this information, identifies Windfield in other places, but notably only says that "one of [Tianqi's] wholly owned subsidiaries", rather than saying Windfield. This issue merits further investigation.