CATL Becomes Pilbara’s Largest Shareholder, Expanding China’s Global Lithium Footprint

On Sep­tem­ber 4, it was report­ed that Chi­nese bat­tery man­u­fac­tur­er, Con­tem­po­rary Amperex Tech­nol­o­gy (CATL), will become the largest share­hold­er in Australia’s Pil­bara Min­er­als by acquir­ing an 8.5% stake for $37 mil­lion.  The stake is rel­a­tive­ly under­priced, as falling lithi­um prices report­ed­ly led Pil­bara to seek equi­ty to raise work­ing cap­i­tal.  The deal rep­re­sents CATL’s first pub­licly-report­ed invest­ment in lithi­um min­ing abroad.  It has, how­ev­er, invest­ed in over­seas bat­tery pro­duc­tion, with a $2.05 bil­lion fac­to­ry in Ger­many under con­struc­tion.  CATL is a key sup­pli­er of bat­ter­ies to elec­tric vehi­cle man­u­fac­tur­ers.  Among oth­ers, it has signed sup­ply agree­ments with Hon­da, Toy­ota, and Vol­vo (owned by Chi­nese auto man­u­fac­tur­er Geely).  That agree­ment was signed dur­ing a vis­it to the coun­try by Pre­mier Li Keqiang.

Pil­bara Min­er­als pro­duces lithi­um-rich spo­dumene con­cen­trate, which can be processed for usage in bat­tery pro­duc­tion.  Under the terms of the deal, sub­ject to approval from Chi­nese reg­u­la­tors and Pil­bara share­hold­ers, the invest­ment will allow Pil­bara to expand the Pil­gan­goo­ra mine.  CATL has also indi­cat­ed its will­ing­ness to even­tu­al­ly become a major­i­ty share­hold­er in Pil­bara, and will have the right to nom­i­nate one non-exec­u­tive board direc­tor.

The deal rep­re­sents part of a broad­er trend of Chi­nese com­pa­nies in the min­ing and bat­tery pro­duc­tion sec­tors invest­ing in lithi­um projects over­seas to secure influ­ence over bat­tery sup­ply chains.  Exam­ples from just the last few months include the fol­low­ing:

- In August 2019, Xin­jiang TBEA Group reached a $1.17 bil­lion joint-ven­ture agree­ment with Bolivia’s YLB to build lithi­um car­bon­ate pants.

- In August 2019, it was report­ed that Tal­i­son Lithi­um was work­ing on a $770 mil­lion agree­ment to fund the expan­sion of the Green­bush­es lithi­um plant in Aus­tralia. Tal­i­son is major­i­ty-owned by China’s Tian­qi Lithi­um.

- In July 2019, Ning­bo Shan­shan invest­ed $22.4 mil­lion in Pil­bara com­peti­tor Altura, with the funds put toward devel­op­ing and expand­ing lithi­um min­ing in the Pil­bara region.

- In June 2019, Huay­ou Inter­na­tion­al signed an agree­ment with AVZ mate­ri­als to pro­vide assis­tance on project financ­ing and EPC ser­vices for the Manono lithi­um project in the Demo­c­ra­t­ic Repub­lic of Con­go.