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(Bloomberg) — China’s major electric car maker BID Co. is looking to enter the lithium business in Latin America and Africa after prices of the key battery component rose to “unreasonable” and “unhealthy” levels.
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BID is scouring the world for lithium supplies, executive vice president Stella Lee said in an interview Tuesday. In Chile, they are in negotiations to enter a mining project and apply for permits to process raw materials into battery cathodes. The automaker is also looking to invest in African lithium projects, although it has found infrastructure gaps there.
“Now we’re looking globally for every opportunity,” Lee said from Santiago, where she will cut the ribbon on Chile’s first electric vehicle dealership. “So Africa and Chile and also Argentina.” In every country that has lithium reserves, we want to participate in the reserves for the future.
While electric vehicle and rechargeable battery makers are reaping the benefits of growing demand in the shift away from fossil fuels, they are also facing tight markets for raw materials such as lithium and copper. In an attempt to lock in future supplies, they began financing mining and processing projects.
Lithium has surged to a record high after demand outstripped supply and prices in China have more than doubled this year. But Lee sees the market returning to surplus next year as new mines come online and prices “stabilize”.
There has been “hot money” entering the lithium space in the last two years, and current prices “are not healthy and will kill the industry” if they continue, said Lee, who heads the Los Angeles-based company’s strategic planning. She spoke from Bloomberg’s office in Santiago.
In Chile, the largest producer of copper and the second largest supplier of lithium, BID supplies electric buses and taxis and opens a representative office aimed at the high-end consumer market. But the Chinese giant is known for its vertical integration and wants to build a local supply chain there.
BID intends to provide technology for Chilean mines to extract lithium directly and will secure supply through off-take agreements with producers, Lee said. From there, BID will use the mineral to produce cathodes that will go into EV batteries, including BID’s Blade, although it has no plans to manufacture battery cells in Chile.
It is also in talks with potential partners — other than existing producers SKM and Albemarle Corp. — for a Chilean mining project, and has submitted applications to state development agency Corfo to make custom materials for cathode production in Chile, Lee says.
The BID is more than willing to deal with a state-owned lithium company that the Chilean government is creating in partnership with private companies. In January, a Chinese firm won a lithium contract from the previous government, but the process was canceled amid community opposition.
The company is expanding its global presence at a time when governments around the world are trying to develop local and regional supply chains for electric vehicles – partly in an attempt to reduce their reliance on China. President Joe Biden’s green stimulus program, for example, aims to create a preference for lithium produced in the US or in free trade partners like Chile.
Berkshire Hathaway Inc. Warren Buffett holds 16% of BID’s Hong Kong-traded H shares, which have fallen 25% this year.
–With assistance from Eduard Thomson and Craig Trudell.
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