CATL to acquire Canada’s Lithium Mining Co. to meet soaring demand for EV batteries

CATL to acquire Canada’s Lithium Mining Co. to meet soaring demand for EV batteries

Contemporary Amperex Technology Company Limited (CATL), a Chinese manufacturer of EV batteries, has announced plans to acquire Canadian Lithium Mining Company for almost $300 million. Founded in 2011, CATL specializes in the production of lithium-ion batteries for electric vehicles (EVs). The company supplies batteries to a number of automobile manufacturers, including Elon Musk-led Tesla Motors.
Expanding its feet further into foreign markets, CATL hit a deal with Canadian Lithium Mining Co. to buy its two mining projects in lithium-rich South American nation of Argentina.

The battery giant agreed to pay CAD$377 million (roughly US$298.7 million) to buy the Canadian miner’s two mining projects in Argentina.

Confirming the deal, Millenial Lithium said that it signed a definitive arrangement agreement with CATL that would see the Chinese manufacturer acquire all of its outstanding shares at a price of CAD$3.85 (US$3.0) each. The whole of the payment will be made in cash.

The Chinese battery manufacturer hit the deal after outshining rival offers from the likes of Ganfeng Lithium Co. Ltd., which had offered CAD$3.60 (US$2.85) per share for the two mining projects in question. Under the terms of the deal, the Chinese battery giant also agreed to reimburse the Canadian miner for the termination fee of US$10 million it had pay to Ganfeng Lithium.

Members of Millennial Lithium’s Board of Directors unanimously approved the CATL Arrangement. As the Canadian firm has already approved the arrangement, the deal is expected to close sometime near the end of 2021 or in early next year.

Announcing the deal, Millenial Lithium said, “Subject to certain conditions, including the parties obtaining the requisite regulatory approvals, the CATL Arrangement is expected to close in the fourth quarter of 2021 or in January 2022.”

Demand for battery-grade lithium has been on the rise for the last few years, simply because the world is making transition from ICEs to EVs.

The two lithium mining projects in Argentina are: Pastos Grandes Project and Cauchari East Lithium Project. It may be noted here that Argentina is part of South America’s ostensible “Lithium Triangle,” which also includes Chile and Bolivia. The so-called “Lithium Triangle” accounts for more than three quarters (75%) of the world’s lithium supply.

CATL decided to make outright acquisition of Millenial Lithium as prices for battery-grade lithium carbonate have more than tripled in China since January 2021, thanks to unprecedented increase in demand for EVs. Previously, the Chinese battery giant acquired stakes in Argentina-focused lithium miner Neo Lithium Corp. and Greenland-focused North American Nickel.