China Natural Resources has agreed to acquire Williams Minerals, the operator of a lithium mine in Zimbabwe, from Feishang Group and Top Pacific (China).

The deal comes amid surging global demand for lithium, which is used in batteries for electric vehicles (EVs).

Feishang Group owns a 70% stake in Williams Minerals while Top Pacific (China) holds a 30% interest. Feishang also holds a controlling stake in China Natural Resources.

Under the agreement, China Natural Resources will indirectly acquire all interests in Williams Minerals in the second quarter of this fiscal year.

From 2024 through 2026, China Natural Resources’ ownership of the lithium mine in Zimbabwe will vest cumulatively, region by region.

This is, however, subject to the issuance of independent technical reports and the company’s full settlement of cash and restricted shares related to the transaction.

China Natural Resources is planning to issue restricted shares as 50% of the deal consideration. The remaining 50% of the consideration includes a promissory note and/or cash, for a maximum consideration of $1.75bn.

In a press statement, China Natural Resources said: “The company will pay an aggregate of $35m by way of promissory notes and/or cash as a deposit if it chooses to proceed with the acquisition after completion of due diligence, and an aggregate of $140m by way of promissory notes and/or cash as an initial instalment.”

However, China Natural Resources said there was no certainty that the transaction would be closed under the current terms. The deal is planned to be closed in the second fiscal quarter of 2023.

In a separate development, China’s Yuxiao Fund has been blocked by the Australian Government from increasing its investment in Northern Minerals on the grounds of national interest, reported Reuters.

Yuxiao Fund, which is an investment vehicle of Chinese national Yuxiao Wu, sought approval from the Foreign Investment Review Board in August 2022 to raise its stake in Northern Minerals to 19.9% from 9.92%.

Northern Minerals executive chairman Nick Curtis told Reuters: “There is a special category of assets for any government to protect its national interest.”