Buffet-backed EV maker BYD in talks to buy 6 lithium mines in Africa

June 1, 2022 0 Comments

Shenzhen-headquartered electric vehicle giant BYD is in talks to buy six lithium mines in Africa with total resources of lithium oxide at 2.5% grade estimated at more than 25 million tonnes, Chinese news outlet The Paper reported on Tuesday, citing sources.

In the third quarter of this year, lithium from these mines might be used in BYD’s blade batteries, said the source.

Lithium resources have become increasingly important as new energy vehicle sales have grown rapidly. Both automakers and EV battery suppliers have begun to strengthen their control over lithium resources, including acquiring lithium mines, seeking strategic partners, and signing long-term agreements to lock in supply.

BYD, backed by Warren Buffett, is one of them. In January, the automaker and also a key battery supplier won a deal to extract 80,000 tonnes of lithium a year in Chile for 20 years, but the deal was later blocked by the Chilean government due to environmental protection and economic development concerns.

As several nations with major lithium deposits have enacted restrictive mining rules, BYD has had to go through partners to access resources. On March 22, it announced that it would invest 3 billion yuan in Chengxin Lithium to seek collaborative lithium resource development for supply reliability and cost-effectiveness.

In April, Chengxin Lithium invested 13.36 million yuan in ABY, an Australian battery metal company with substantial experience in the building of important mines in Africa and a 51% stake in the Kenticha lithium mine in Ethiopia. In the meantime, it invested an additional 176 million yuan in Lithium Chile, becoming the company’s largest shareholder with a 19.86% ownership.

CATL, Tesla’s Chinese battery supplier, is also seeking to be more active upstream. It was the losing bidder for Canada’s Millennial Lithium Corp., and has signed agreements with several Chinese provincial governments such as Sichuan and Jiangxi to secure lithium supplies. 

Lithium prices have skyrocketed over the past year or so. According to Benchmark Mineral Intelligence (BMI), the price of lithium-rich raw material spodumene rose by 478.3% between January 2021 and January 2022. The price is likely to continue to rise due to high demand for batteries and inflation.

Despite the stringent Shanghai lockdown in April that interrupted vehicle manufacturing and sales, BYD reported an outstanding results. Its electric car and plug-in hybrid sales for the month increased by 313 percent year-over-year to 106,000 units.

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