Ganfeng, Lithium Argentina in $1.8B project merger

China’s Ganfeng Lithium and Switzerland-based Lithium Argentina (TSX, NYSE: LAR) agreed this week to merge their assets in Argentina’s Salta province into a single large-scale lithium operation.

The new joint venture combines Ganfeng’s Pozuelos–Pastos Grandes project with Lithium Argentina’s 85%-owned Pastos Grandes and 65%-owned Sal de la Puna projects, to be known as “PPG”. Ownership will be split 67% for Ganfeng and 33% for Lithium Argentina, based on resources, capital contributions, and technology inputs.

“This alliance will provide access to advanced technologies, greater financial flexibility and significant operational synergies,” Lithium Argentina president and CEO Sam Pigott said in the statement. He added that it would strengthen the company’s global lithium supply chain strategy.

Lithium Argentina shares were down 0.5% to $4.74 apiece on Thursday afternoon, for a market capitalization of $552 million (C$762.28 million). The stock has traded in a 12-month range of $2.36 to $5.50. 

Three phases

The merged operation aims to produce up to 150,000 tonnes per year of lithium carbonate equivalent in three phases of 50,000 tonnes each. 

The $1.8 billion (C$2.48 billion) already invested covers wells, pilot evaporation ponds, production facilities and accommodations for over 2,000 workers.

Ganfeng will provide a $130 million, six-year loan to Lithium Argentina at an interest rate tied to a U.S. benchmark plus 2.5%, secured against its stake. Ganfeng can also buy up to half of Lithium Argentina’s initial output, capped at 6,000 tonnes annually, at market prices.

Hybrid model

The PPG venture plans a hybrid production model that combines direct lithium extraction with traditional solar evaporation. The approach could blend the efficiency of modern technology with the proven reliability of evaporation, potentially mitigating the downsides of each method.

The companies already work together at the Cauchari-Olaroz mine in Jujuy province.

Their latest move comes as global markets react to supply news from China, where CATL, the world’s largest EV battery maker, halted production at its Jianxiawo mine in Yichun after its permit expired. The mine accounts for about 6% of global lithium supply, and its closure has pushed international prices higher, easing fears of a glut.