HONG KONG – China's Tianqi Lithium Corp is looking to raise up to $1-billion in its Hong Kong stock market flotation, despite this year's fall in lithium prices, two people close to the deal told Reuters.

The company, the world's second largest lithium producer by sales, on Friday filed plans for Hong Kong's second lithium listing this year. The draft prospectus was put on the Hong Kong exchange website late on Monday.

Tianqi, which is based in China's southwestern province of Sichuan and is building the world's biggest lithium processor in Western Australia, will list on the stock market later this year, the sources told Reuters.

The final deal size could be smaller than $1-billion due to a steep drop in lithium carbonate prices, said the people, who declined to be named as the deal details are not public yet.

Tianqi declined to comment.

Lithium is a key ingredient in rechargeable batteries and China has aggressively promoted electric vehicles to combat air pollution and help domestic carmakers leapfrog the combustion engine to build global brands.

The Tianqi float, however, comes at a critical time for the lithium market worldwide. Prices of lithium carbonate have fallen as much as 38 percent so far this year due to a raft of new supply that has raised concerns about a short-term surplus.

Nevertheless, demand for lithium is expected to spike in the long term as Tesla Inc and Volkswagen bring electric cars to the mainstream market.

Shenzhen-listed Tianqi's domestic counterpart - Ganfeng Lithium - also plans a float of up to $1-billion in Hong Kong after the summer, according to Thomson Reuters publication IFR.

Tianqi's proposed listing comes after its blockbuster $4.1-billion deal to buy a 24% stake in Chile's Sociedad Quimica Y Minera (SQM), the world's No.2 lithium miner, in May.

The majority of Tianqi's listing proceeds will be used for refinancing the SQM stake purchase, said the company in its draft prospectus.

The firm posted a 40% jump in annual revenue in 2017 to 5.47-billion yuan ($796-million), primarily from making and selling lithium compounds and derivatives. It reported 3.34-billion yuan in profit, almost double that in 2016.

Tianqi, whose shares have almost halved from a peak of 73.39 yuan in September last year, makes a variety of raw materials for the battery industry. Its lithium project in Australia produces hard rock lithium, primarily for export to China.

It has hired CLSA and Morgan Stanley as co-sponsors for the listing.