BYD in talks with Chilean lithium producers
Chinese electric carmaker wants to secure supplies of key battery material
YESTERDAY by:
Henry Sanderson in Santiago
BYD, the Chinese electric car and bus company part-owned by Warren Buffett, is talking to lithium producers in Chile about potential deals to secure supplies of the key battery material.
Fred Ni, vice-president of BYD Americas, said the company was considering a range of options from partnerships to supply agreements and direct investments.
“It’s still in negotiation stage. We haven’t defined which model it will be,” Mr Ni said at the CRU world copper conference in Santiago. “We consume 20 per cent of the lithium supply in the world — that means we have a strong interest to secure stable supply of lithium.”
Chile is one of the world’s largest sources of lithium, a key ingredient for batteries, which is extracted from brine trapped beneath the country’s Atacama Desert. Sociedad Química y Minera de Chile (SQM) and US-based Albemarle are two of the country’s largest producers, while the government is also encouraging state-owned copper company Codelco to develop deposits.
Beijing wants to double electric vehicle battery capacity by 2020, and has encouraged producers to invest overseas. Chinese companies have sought out positions in the lithium-ion supply chain by buying up mining assets.
Ganfeng Lithium, one of the country’s largest producers of the battery chemical, bought a 19.9 per cent stake in an Argentine lithium project earlier this year. The deal followed on the heels of a purchase of a 2.1 per cent stake in SQM by Tianqi Lithium.
Mr Ni said BYD was also worried about the price of cobalt, another metal used in batteries. Most of the world’s cobalt is produced in the Democratic Republic of Congo by mining company Glencore.
The company has started to use cobalt-containing batteries in its new Tang and Qin passenger vehicles. These batteries typically have a higher energy density, allowing them to store more power per kilogramme.
Cobalt prices have more than doubled since last year due to strong demand from battery makers for cobalt chemicals, and as a group of hedge funds stockpiled the metal in warehouses.
“The price of cobalt is very volatile. That is the material that manufacturers are trying to reduce,” Mr Ni said.
“We saw before when we were doing rechargeable batteries for cell phones and notebook computers that the cobalt price increased four times within a year. We can imagine if we have so many electric cars on the street how much cobalt we are going to use.”
BYD’s electric vehicle sales rose 70 per cent last year to 96,000 vehicles. While growth is likely to slow this year after China’s government reduced subsidies for buyers, the company is targeting around sales of around 150,000 cars and buses.
https://www.ft.com/content/ab639040-1aa9-11e7-a266-12672483791a
The deal values the privately-owned company at about $12bn.
