Canmax Surges as CATL Invests Strategically in Battery Materials

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Shares of Canmax Technologies soared after the Chinese supplier of battery materials announced a strategic investment from its key client, Contemporary Amperex Technology. As of midday in Shenzhen, Canmax [SHE: 300390] was up 13.5%, trading at CNY34.53 (approximately USD4.85), having earlier increased as much as 18.3% to reach its highest since June 2023. Meanwhile, CATL [SHE: 300750] declined slightly by 0.7% to CNY386 (USD54.25).

The company’s main controllers, Pei Zhenhua and his wife Rong Jianfen, agreed to transfer nearly 107.6 million freely tradeable shares of Canmax to CATL at a price of CNY24.49 per share, totaling about CNY2.6 billion (around USD370 million). This deal was disclosed on October 31. The transaction price is about 23% lower than Canmax’s closing price of CNY31.67 on that day but, considering the past week’s 36% rise, it’s roughly a 5% premium over its closing of CNY23.33 on October 22.

Following the transaction, Pei and Rong’s ownership will decrease from 31.8% to 18.9%, yet they will remain the company’s actual controllers. CATL’s holding will increase significantly from 0.6% to 13%.

Pei holds an indirect 6.2% stake in CATL through various investment platforms. CATL currently owns a 25% stake in two of Canmax’s lithium battery material subsidiaries.

Canmax is a prominent supplier of lithium carbonate and lithium hydroxide, essential materials for batteries. It has an annual capacity of 135,000 tons of battery-grade lithium hydroxide and 30,000 tons of battery-grade lithium carbonate. The company also holds rights to develop upstream lithium mining resources in China, Nigeria, and the Democratic Republic of the Congo, according to executives shared with investors in June.

This deal marks CATL’s second recent investment in an upstream lithium material supplier. In late September, the company announced a CNY2.1 billion investment to acquire control of Jiangxi Shenghua New Material, a provider of high-quality lithium iron phosphate cathode materials.

In recent years, falling prices of lithium battery materials have allowed CATL to expand its upstream holdings. During the peak prices in 2021, Canmax’s stock hit as high as CNY103 (about USD14.47).