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Chinese Tesla lithium supplier probed for insider trading

Ganfeng Lithium, one of China’s biggest lithium producers and an important Tesla supplier, is being investigated by Beijing’s top securities regulator for insider trading.

Shares in Ganfeng Lithium dropped by as much as 7 per cent in Shenzhen after the company disclosed the probe by the China Securities Regulatory Commission for buying and selling a mainland-listed stock in the secondary market.

No further details of the investigation were provided and the company declined to comment to the Financial Times, citing the ongoing investigation.

The company said in a statement to the Hong Kong stock exchange that the CSRC decided to file a case on January 24, but it only received a case filing from the regulator on July 1.

Ganfeng Lithium, which is based in China’s south-eastern Jiangxi province, added that the investigation would not impact its “normal production and business activities” and it vowed to “actively co-operate” with investigators.

The probe comes as Ganfeng Lithium, along with a broader clutch of big Chinese resource mining and processing groups, spearhead state-backed efforts to cement China’s dominance over the supply chain for electric vehicles and batteries. While Australian mines extract more than half the world’s lithium, Chinese companies are by far the biggest processors of the mineral.

Ganfeng Lithium, which also listed shares in Hong Kong in 2018 and counts Tesla and BMW as customers, is among the largest producers of lithium in the world.

The company has been navigating a volatile period as prices for lithium carbonate fluctuate and sweeping coronavirus lockdowns in China have disrupted supply chains.

The company also faces uncertainty over its assets in Mexico, where President Andrés Manuel López Obrador has nationalised the lithium industry.

Analysts from Citi noted that the company’s Sonora project, in north-west Mexico, was expected to account for about 5 per cent to 8 per cent of Ganfeng’s total lithium output by 2025.

Despite the near-term challenges, many analysts and investors have remained upbeat about the prospects of the Chinese electric vehicle industry. The sector is projecting immense growth as rival carmakers try to overhaul their business models to focus on electric cars, whose batteries rely on lithium.

In recent weeks, three Chinese EV battery and material companies — the world’s biggest battery maker Contemporary Amperex Technology, miner Tianqi Lithium and Hong Kong-listed Huayou Cobalt, another big Chinese raw material supplier — moved to tap investors for more than $10bn in capital to expand operations.

Additional reporting by Maiqi Ding in Beijing

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