Tianqi drops bid for Essential Metals as M&A heats up

China’s Tianqi Lithium Corp. said it’s scrapping its takeover bid for Australian explorer Essential Metals Ltd. after failing to secure enough support from the target’s shareholders.

Tianqi dropped its A$136 million ($91 million) plan to buy Essential after it failed to secure the backing, it said late Thursday in a filing to the Shenzhen Stock Exchange. Essential is now free to engage with other parties to progress its Pioneer Dome project toward production, the Perth-based company said Friday.

The move comes as global miners rush to secure deposits of lithium, which is in high demand due to its use in electric vehicle batteries. Consumption is expected to jump ninefold by 2050, according to BloombergNEF. Liontown Resources Ltd., another Australian developer, last month spurned an A$5.5 billion cash offer from Albemarle Corp., the world’s biggest producer of the metal, saying it undervalued the company.

Tianqi made its bid for Essential in January, through its venture with local miner IGO Ltd. and only received 31.5% of the votes, below the required threshold of 75%. In its statement on Friday, Essential also said Mineral Resources Ltd., another Western Australian miner, had become a major shareholder with a 19.55% stake.

Essential fell as much 9% on Friday and traded at A$0.46 a share at 2:37 p.m. in Sydney, below the A$0.50 offered by Tianqi. Shareholders might be holding out for a higher offer, said Mohsen Crofts, an analyst at Bloomberg Intelligence.

“IGO, Tianqi and Mineral Resources are attempting to increase lithium reserves to take advantage of enormous long-term demand requirements for the metal,” he said.

(By Annie Lee)