China's Chengdu Tianqi Industry Group Co yesterday launched a C$806 million ($803 million) bid for Talison Lithium Ltd, topping a friendly C$724 million offer from Rockwood Holdings Inc.

Tianqi has made the C$7.15-a-share offer through its subsidiary Windfield Holdings Pty. Its offer is 65 cents higher than the bid from US-based chemical producer Rockwood and is at a premium of 65 cents per share, or 10 per cent to Rockwood's current offer price.

Tianqi said that its offer includes signed commitment letters for funding the acquisition from China Development Bank and an ADM Capital advised lender.

Tianqi, which specialises in lithium, and mining industry and agriculture machinery, last week said that it had acquired a 15 per cent stake in Talison Lithium and was planning to table an offer.

Based in Perth, Australia, Talison is a leading global producer of lithium with projects in Western Australia and Chile. It operates the largest open-pit mine for lithium with the highest grade ore in the world, which are used for producing battery-grade lithium for electric vehicles.

Talison also mines for technical-grade lithium used in batteries for consumer electronics, electric bicycles, buses aerospace alloys, wind turbines, glass and ceramics.

Tianqi purchases more than 90 per cent of its lithium raw material from Talison, and is the only distributor of Talison's technical-grade lithium in China.

Lithium batteries have higher energy density compared to nickel-cadmium and nickel-metal hydride batteries, are low in weight and have a longer shelf and operating life.

Lithium batteries are used to power cell phones, laptops, other hand held electronic devices, power tools and large format batteries for electricity grid stabilisation.

Tianqi said it was confident that Talison's board would consider the offer to its offer a "superior proposal" as compared to Rockwood Holdings offer. It also noted that analysts such as Byron Capital Markets have said that if Rockwood were to acquire Talison, Rockwood "would become the dominant lithium producer with a market share of over 50 per cent of the lithium products sold into various industries."

''This could potentially have an adverse impact on Talison's existing customers and impede the development of lithium usage more generally,'' it added.
Founded in 2003, Tianqi is a privately held Chinese company, whose business activities are primarily conducted through four subsidiaries.

Listed on the Shenzhen Stock Exchange, Sichuan Tianqi Lithium Industries, produces lithium carbonate and other lithium products from chemical-grade lithium concentrates sourced from Talison, Sichuan Tianqi Industry is a distributor of technical grade lithium concentrates, and the sole distributor for Talison in China.

Group company Chengdu Tianqi Machinery provides spare parts and accessories for machinery and electrical equipment used in the construction, packing and agriculture sectors, while Chengdu Sendasun Agricultural Machinery undertakes research, development, manufacturing and sales of agricultural equipment.