Lithium Americas beats CATL to buy Millennial for $400 million
Updated 10:33, 19-Nov-2021
The CATL exhibition booth at the 21st China International Fair for Investment and Trade (CIFIT) in Xiamen, southeast China's Fujian Province, September 8, 2021. /CFP

The CATL exhibition booth at the 21st China International Fair for Investment and Trade (CIFIT) in Xiamen, southeast China's Fujian Province, September 8, 2021. /CFP

Lithium Americas is buying Argentina-focused Millennial Lithium for $400 million in stock and cash, eclipsing an offer from China's Contemporary Amperex Technology (CATL) as demand for the electric vehicle (EV) battery metal surges worldwide.

The deal announced on Wednesday came a day after a deadline expired for CATL to respond to the Lithium Americas offer for Millennial. CATL is the world's largest EV battery manufacturer, but does not produce any lithium.

Lithium Americas has also reimbursed Millennial for the termination fee of $20 million.

Millennial Lithium has been seen as a good catch among many companies. Chinese lithium giant Ganfeng Lithium in July said Millennial initially agreed to a C$353 million ($280 million) takeover and in September, CATL joined the "battle" and signed a 100-percent equity acquisition agreement with Millennium Lithium.

"This is a great expansion opportunity for us in Argentina," Jon Evans, Lithium Americas chief executive, told Reuters, adding the company hopes to start construction on Millennial's Pastos Grandes lithium brine project within two years. The project is expected to produce 24,000 tonnes of battery-quality lithium carbonate annually  for 40 years.

Lithium Americas has been building the Cauchari lithium project with Ganfeng Lithium – its largest shareholder – near the Millennial lithium deposit, which made the buyout even more appealing, Evans said.

Canada-based Millennial Lithium is listed on the Toronto Stock Exchange and is engaged in the business of acquiring, exploring, and developing lithium mineral properties.

Shares of Lithium Americas rose 3.5 percent on Wednesday, while those of Millennial fell about three percent.

Shortage of lithium

The lithium "battle" reflects the shortage of the element, which has become a strategic resource for EV battery makers and automakers amid an EV boom.

Prices of lithium battery upstream materials have risen significantly. Since the beginning of the year, the prices of raw materials such as lithium, nickel, and cobalt have continued to rise, leading to increases in the prices of materials required for the production of lithium batteries.

The average market prices of lithium battery upstream materials in China surged significantly in September compared to January, according to Shenzhen-based Gaogong Industry Research Institute (GGII).

Supply chain disruptions this year have caused production cuts among global automakers as the industry has lacked both batteries and chips. Therefore, expanding production is a key for the EV sector, which needs a solid supply of materials.

GGII estimates that the global battery and storage battery shipments in 2025 will be 1516 GWh. If CATL wants to occupy at least 30 percent of the market share by 2025, it will need to expand its production capacity to reach a sales volume of 455 GWh of lithium batteries in 2025.

(With input from Reuters)

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