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Chinese car maker invests in Australian lithium miner

Move by big SUV manufacturer shows interest in securing battery raw material supplies

by Jean-François Tremblay
October 4, 2017 | A version of this story appeared in Volume 95, Issue 40

A photo of people visiting the stand of Great Wall Motor during an automobile exhibition in China.
Credit: Imagine China/Newscom
To secure lithium supply, China's Great Wall Motor is investing in an Australian producer. Shown here is the company's stand at an auto exhibition in Shenzhen, China, last year.

Highlighting auto industry concern about access to battery raw materials, a Chinese car maker has agreed to invest in an Australian lithium mining operation.

Great Wall Motor, China’s largest producer of SUVs, will pay $22 million for a 3.5% stake in Pilbara Minerals. Under the agreement, Great Wall will buy 75,000 metric tons per year of lithium-ion battery-grade lithium carbonate for the next five years. The deal gives the Chinese firm the option to buy another 75,000 metric tons annually by loaning an additional $39 million to Pilbara.

Pilbara will use the $22 million in funding to complete the construction of its Pilgangoora Lithium-Tantalum Project. The additional $39 million would help fund the construction of a phase 2 expansion at the site.

Demand for lithium carbonate and lithium hydroxide is surging worldwide because of rising demand for electric vehicles powered by lithium-ion batteries. In the U.S., the car company Tesla is ramping up production at its Gigafactory battery plant in Nevada. Co-owned with Panasonic, it’s called the world’s largest lithium-ion battery plant. Meanwhile, in China, authorities have ordered car makers to get 10% of their total sales from hybrid and electric vehicles by 2019.

The stock prices of the established lithium chemical makers Albemarle and SQM are up more than 50% this year and many other companies, including Pilbara, are trying to get into the business.

Great Wall’s investment in Pilbara, though unusual, is not unprecedented. In 2010, the Chinese electric vehicle maker BYD invested about $30 million in a lithium mine in Tibet.


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