EV lithium battery supply race hots up as China’s Yibin extends US$15 million loan to Australian miner Pilbara Minerals

Su-Lin Tan
·5-min read

As miners eye expansions in the global race to secure a supply of lithium, a critical element in electric vehicle batteries, China’s Yibin Tianyi Lithium Industry has extended a US$15 million zero-interest loan to expand its relationship Australian miner Pilbara Minerals amid a steady trade of the mineral between the two countries.

The loan from lithium chemical producer Yibin is in the form of an unsecured prepayment to Pilbara Minerals’ operating subsidiary, Pilgangoora Operation, and is the second stake that its backer, China’s largest electric vehicle battery maker, Contemporary Amperex Technology (CATL), has taken in the company.

Yibin was established in 2018 as a joint venture between CATL and two other Chinese companies, chemical business Tianyuan Group and machinery manufacturer Canmax, before CATL acquired a 8.5 per cent stake in Pilbara Minerals in 2019 for A$55 million (US$42.6 million).

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“Our relationship continues to grow with Yibin Tianyi as we work together in support of both our businesses’ growth ambitions; for Yibin Tianyi, to become one of the biggest lithium chemical suppliers in China with the support of our major shareholder, CATL, and for us to become one of the largest, lowest cost lithium raw material suppliers in the world,” Pilbara’s managing director Ken Brinsden said.

EV battery supply chain firms seek diversification as Biden order shines more light on China reliance

The investment comes as demand for lithium explodes amid a global boom in electric vehicles, which are dependent on lithium-ion batteries, and as countries step up efforts to exert control over the supply chains of minerals critical to their production, including lithium.

Australia, which is the world’s largest exporter of lithium – providing around 55 per cent of the world’s supply – anticipates demand for the mineral to charge forward, with its department of industry predicting world demand will rise by 36.6 per cent this year and 20.5 per cent next year. Australia’s Critical Minerals Strategy, which was drawn up in 2019, lists lithium as a critical mineral.

Australian miners are also expecting the well-established lithium trade route with China – their closest major buyer – to continue to thrive in spite of the two countries’ bilateral tensions.

Last month, US President Joe Biden issued an executive order to review the American supply chains of rare earth elements, semiconductors, pharmaceuticals and car batteries that are crucial to the technology and defence sectors.

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Yibin Tianyi’s loan to Pilbara will go towards an upgrade of Pilbara’s Pilgangoora Plant 1 in Western Australia that will push up its production of spodumene – raw lithium ore – by between 30,000 and 50,000 tonnes a year.

The boost in production will mean increased sales of the mineral or “offtake” to Yibin of 40,000 tonnes a year in addition to an existing five-year agreement of 75,000 tonnes a year. The additional production is expected to kick in later this year or early next year.

Yibin, which commissioned the building of a new 20,000-tonnes-a-year lithium hydroxide plant in Yibin in Sichuan province in southwest China in late December, also holds a 9 per cent stake in another Australian miner, AVZ Minerals, which owns the Manono lithium project in the Democratic Republic of Congo.

AVZ told the Roskill Lithium Mine to Market Conference last week that it expected a global lithium shortage in the next few years, not just due to the strong demand from the electric vehicles sector, but from many battery makers looking to secure their own supply chains outside China.

The US just woke up literally, especially with the Biden administration making a policy push

Brett Lynch

Another Australian-listed miner, Jindalee Resources, has lithium mines in the United States and agreed that the US government too was offering strong support for lithium miners.

Like Pilbara, Jindalee also raised new capital on Monday after receiving A$9 million (US$7 million) from Australian institutional investors to accelerate exploration and development at its McDermitt and Clayton North lithium projects in the US, as well as to advance its gold and nickel projects in Western Australia.

Last week, another Australian lithium miner, Sayona Mining, said it had expanded its Tansim Lithium Project acreage in Quebec in Canada by a further 44 per cent amid “accelerating demand for the key battery metal”.

“The US just woke up literally, especially with the Biden administration making a policy push,” said Sayona managing director Brett Lynch. “The US market is very nimble when there is money to be made.”

It could take 20 to 30 years for the US to catch up with China

Institute of Energy Research

But, the US would likely be playing catch up with China, which had spent the past eight years finessing and dominating the downstream battery processing supply chains, he added.

The Institute of Energy Research said in a note late last year that China has been focusing on building capacity “at every stage of the battery supply chain, thereby controlling the processing of almost all of the critical minerals”.

“China’s approach recognises that you do not need to own the raw material sources to control the global flow of trade in the supply chain. With Biden’s plans, the US will be dependent again on key minerals for its energy system and this time the dependency will be with one country – China,” the energy research group said in their report in October, referring to comments Biden made during his presidential campaign.

“It could take 20 to 30 years for the US to catch up with China.”

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