Off the Wall
Auto maker drives into lithium supply
“it highlights the strategic importance for the global automotive sector of securing access to large scale, consistent, high quality sources of battery raw materials in low-risk jurisdictions.”
CHINA’S Great Wall Motor Company will accelerate into WA’s lithium sector after landing an offtake agreement with Pilbara Minerals for 75,000 tonnes per annum (tpa) of the miner’s Stage 2 production.
As part of the deal, Great Wall has committed $28 million upfront to receive 56 million Pilbara Minerals shares, effectively giving it 3.5 per cent ownership of the company.
The automaker also has the option to secure a further 75,000tpa by providing Pilbara Minerals with $US50m of debt financing for the Stage 2 expansion.
Pilbara Minerals managing director Ken Brinsden said the deal was significant for company and the rapidly evolving lithium supply chain.
“It highlights the strategic importance for the global automotive sector of securing access to large scale, consistent, high quality sources of battery raw materials in low-risk jurisdictions,” Mr Brinsden said.
“Attracting a company of Great Wall’s size and calibre as a long-term off-take and funding partner is a strong endorsement for the Pilgangoora project and the company.”
Together with the offtake, Pilbara Minerals, “in response to market demand for lithium and the strong appetite for spodumene concentrate globally”, said it would upgrade its Stage 2 plan to encompass a nameplate capacity of 5 million tonnes per annum (mtpa) up from 4mtpa announced in the pre-feasibility study.
This would give Pilgangoora the ability to produce more than 800,000t of spodumene concentrate each year, making it one of the world’s largest lithium mines.
Evolving with the times
Great Wall, with its 60,000 strong workforce and $US18.1 billion market cap, is China’s largest manufacturer of SUV’s.
As the Chinese Government’s new cap-and-trade energy policy comes into effect in 2019, its car manufacturers will be required to obtain a new energy vehicle score of at least 10 per cent zero or low-emission vehicles, rising to 12 per cent in 2020.
It has so far produced only one electric vehicle – the C30EV sedan.
If the company doesn’t adjust its product line, it will be forced to purchase energy credits or pay hefty fines.
Investing into the WA’s lithium supply may be a sign Great Wall is shifting from its SUV strategy to ‘greener’ pastures.