Galan Lithium secures offtake prepayment deal for HMW LCE with Chengdu Chemphys

Galan Lithium (ASX: GLN) has secured an offtake prepayment deal with China’s Chengdu Chemphys Chemical in relation to its flagship Hombre Muerto West (HMW) project in Argentina.

Under the terms of a memorandum of understanding, Galan will sell a minimum of 23,000 tonnes of lithium carbonate equivalent as a lithium chloride product over the first five years of the project’s Phase 1 production life.

Chemphys will also provide Galan with a US$40 million offtake prepayment facility to facilitate the continued development of Phase 1.

Lithium chloride samples

Galan managing director JP Vargas de la Vega said Chemphys was one of the global lithium converters that had responded well to the high-grade, low-impurity lithium chloride samples produced from the HMW pilot plant.

“Chemphys is a leader in processing lithium products in China and is a trusted partner to some of the world’s largest battery manufacturers,” he said.

“This offtake partnership and the financing prepayment will be foundational agreements for HMW [and] we look forward to the execution of definitive agreements and further advancing the project’s development in anticipation of first lithium chloride production in the second half of 2025.”

‘Great partner’

Chemphys director Alison Dai said the company was pleased to have secured the offtake from HMW.

“We place great importance on the quality of lithium supply and visibility of the world’s supply chain,” she said.

“Galan is a great partner for Chemphys on these measures, and we look forward to a strong relationship.”

Spodumene pioneer

Chemphys has been a high-purity lithium chemicals and technology company since its establishment in 1998 with proprietary lithium processing technologies including direct lithium extraction, direct precipitation and electrochemical processes.

The company’s founder was pivotal in introducing spodumene into China in the 1990s and has been at the forefront of producing battery-grade and high-purity lithium products qualified by leading global battery materials customers.

Chemphys has various interests in lithium companies with projects in Argentina, including in the Salta and Catamarca provinces.

The Hombre Muerto Salar has been proven to host lithium brine deposits of the highest grade and lowest impurity levels within the country’s famed “lithium triangle.”