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By Julia Fioretti
HONG KONG, Oct 4 (Reuters) - China's top lithium producer Ganfeng Lithium, a supplier to carmakers such as Tesla and BMW, has priced its Hong Kong listing at the bottom of its marketed range, raising $421 million, according to a source involved in the deal.
Ganfeng priced its offering at HK$16.50 ($2.11) per share, the source said, at the bottom end of an indicative range of between HK$16.50 and HK$26.50 ($2.11-$3.38).
The company declined to comment.
The weak pricing comes at a time when an oversupply of lithium has pushed down prices even as demand for the metal is expected to increase as electric cars become more mainstream.
Hong Kong, on track for a bumper year of listings, has nevertheless seen a lot of them trade below their offering prices, with increasing Sino-U.S. tensions weighing on market sentiment.
The company could raise up to $448 million if a greenshoe, or over-allotment, option is exercised after shares begin trading on Oct. 11.
The Shenzhen-listed firm had earlier this year delayed plans to raise up to $1 billion in a Hong Kong listing as lithium prices had dropped sharply due to a raft of new supply that raised concerns about a short-term surplus.
But demand for lithium, a key ingredient in rechargeable batteries, is expected to rise in the long term as Tesla, Volkswagen and other manufacturers bring electric cars to the mainstream market.
Demand should also get a major boost as China, the world's top auto market, aggressively promotes electric vehicles to combat air pollution and help domestic carmakers leapfrog the combustion engine to build global brands.
Ganfeng last month announced an agreement with Tesla to supply about 20 percent of its annual production to the electric carmaker's battery suppliers. The agreement is valid until the end of 2020 and may be extended for three years.
It has also struck a five-year deal with BMW to supply its battery makers with lithium products.
Ganfeng plans to use proceeds from the Hong Kong listing to acquire lithium resources and expand its production capacity of lithium metals, batteries, compounds and recycling.
It secured six cornerstone investors including China Structural Reform Fund and South Korean battery makers LG Chem and Samsung SDI, who together have committed to buy $229.8 million in shares. ($1 = 7.8348 Hong Kong dollars) (Reporting by Julia Fioretti; Editing by Himani Sarkar, Kirsten Donovan and Adrian Croft)