French miner Eramet SA will buy back Tsingshan Holding Group Co.’s stake in an Argentinian lithium project, marking a rare retreat for the Chinese conglomerate from an expansion beyond its core nickel business.

Eramet will buy out the Chinese stainless steel conglomerate’s 49.9 percent interest in Eramine Sudamerica assets, the company said in a statement on Thursday. The purchase will have a USD 699-million net cash impact, the miner said, without giving further details.

The move comes amid a slump in lithium prices that is affecting the sector at large. Earlier this month, Rio Tinto Plc agreed to buy Arcadium Lithium Plc for USD 6.7 billion, its biggest purchase in almost two decades. In August, Australia’s Pilbara Minerals Ltd. took over a project in Brazil, marking its first international expansion.

For Tsingshan — the world’s top nickel producer — the sale represents an unusual pullback from its rapid diversification into the broader battery space. The conglomerate had been developing lithium assets in Africa and South America, while also looking to set up plants in Indonesia and enter the US storage market.

“Tsingshan came as a financial partner,” Eramet CEO Christel Bories said on a call with analysts, adding that the group is used to being the operator of processing plants. “We have decided together that as we regained some flexibility it was time for them to leave,” she said.

The company’s billionaire founder Xiang Guangda said in the statement it would support a smooth and constructive handover of the assets to Eramet. The two firms also jointly run the world’s biggest nickel mine in Indonesia.

Eramine Sudamerica’s plant runs a direct extraction technology with a capacity to produce 24,000 tons of lithium carbonate equivalent a year, Eramet said in the statement. The Centenario brine deposits it draws from could support more than 75,000 tons of output a year, the company said.

The French government, which is one of Eramet’s biggest shareholders, reacted positively to the deal.

“This strengthens our critical raw materials sovereignty,” Energy and Climate Minister Agnès Pannier-Runacher said on Franceinfo radio on Thursday.

Eramet posted third-quarter adjusted turnover of €809 million, down 17% year-on-year. The company said it expects profits for the second half of 2024 to be higher than the first.