Galaxy Resources, the world's fourth-largest maker of lithium carbonate, used in making batteries, will keep its Hong Kong listing options open despite poor market conditions, after Japan's mega-earthquake derailed its listing plan last year.
The Perth, Australia-based and Sydney-listed firm believes mainland-market-savvy investors in Hong Kong have a better appreciation of its 'growth story' compared to investors in Australia, although current low valuations on the Hong Kong market has made a share offer unattractive at present, according to executive director Anthony Tse.
'Our story will get a better following in Hong Kong, because investors familiar with the mainland can easily see the market potential [of lithium batteries in electric bicycles],' Tse said in an interview late last month. Galaxy was listed in Sydney in 2007.
Another factor stalling the need for a hurried resurrection of listing plans, said Tse, was the fact that Galaxy raised US$120 million in April last year through a shares placement to institutional investors in Australia. The placement was made after it dropped its US$200 million Hong Kong listing plan at the eleventh hour a month earlier.
Earlier this month Galaxy announced an all-shares merger with Canada-listed Lithium One, offering the latter's shareholders a 27 per cent price premium for their shares.
The merger will allow Galaxy to expand its upstream resources to meet surging downstream demand from the electric bicycle and vehicles market. Before the merger's completion, Galaxy plans to raise US$50 million in Australia by issuing more shares.
Some 29 per cent of lithium consumed last year was in the batteries manufacturing industry, followed by 16 per cent in ceramics, 14 per cent in lubricating greases, and 13 per cent in glass-making, according to Singnumbox. The Chile-based consultancy forecasts global consumption of lithium will grow at an average annual rate of 10 per cent between last year and 2020 to 300,000 tonnes.