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Ganfeng Lithium increases stake in Bacanora's Sonora project to 50%

JOHANNESBURG, Nov 13 (Reuters) - China’s Ganfeng Lithium Co Ltd on Friday exercised its option to increase its stake in Bacanora Lithium’s Sonora project in Mexico from 22.5% to 50%, as companies around the world bet on surging demand for the battery metal.

Ganfeng, which has already agreed to buy all the lithium Sonora produces, will lead the engineering, procurement and construction and will have two directors on the project’s board - with the remaining two appointed by Bacanora.

Sonora is targeting production in 2023, with construction beginning next year.

“The technology, the financing, and the support from Ganfeng make a big difference to us,” said Bacanora CEO Peter Secker. “We think it’s a strong endorsement for both the company and the project.”

Secker said the outlook for lithium - a white metal used to make electric vehicle (EV) batteries - is much stronger now than it was before the COVID-19 pandemic upended the world economy.

“The bounce-back has really shown that people are now significantly more focused on EVs,” he said.

In China, the world’s biggest auto market, sales of new energy vehicles will make up 50% of overall new car sales by 2035, an industry body said last month.

Separately, Ganfeng said on Friday it would reduce its stake in wholly-owned battery unit Ganfeng Battery to 54.6% via an employee stock scheme, with its top executives among those to make capital contributions totalling 415.36 million yuan ($62.88 million) in return for equity interests.

“The directors consider that the capital increase represents an opportunity to optimise the shareholding structure of Ganfeng Battery (and) to raise capital for further business development,” it said in a Hong Kong stock exchange filing.

$1 = 6.6057 Chinese yuan renminbi Reporting by Helen Reid; Additional reporting by Tom Daly; Editing by Mark Potter