China's Great Wall secures lithium supply with Australian miner

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China automaker Great Wall Motor Co Ltd will take a 3.5 percent stake in Australian lithium miner Pilbara Minerals Ltd, the Chinese firm said late on Thursday, helping shore up the supply of a key mineral for electric vehicles.

China on Thursday said carmakers would need to hit a quota for new energy vehicles by 2019, part of a major push by the world’s biggest auto market to phase out petrol cars and shift toward pure electric and plug-in hybrids.

Great Wall in a statement to the Hong Kong stock exchange said it would take the equity interest in Pilbara for around A$28 million (22 million US dollars).

Pilbara owns the Pilgangoora Lithium-Tantalum project south of Port Hedland in Western Australia, which is expected to begin production in the first half of 2018.

The deal would help Great Wall secure supplies of a mineral key to developing electric vehicles. China, keen to combat pollution and close a competitive gap with global rivals, wants to set aggressive goals for electric and plug-in hybrid cars to make up at least a fifth of Chinese auto sales by 2025.

Great Wall has also agreed on an off-take deal with Pilbara for 75,000 tonnes a year of spodumene concentrate - a source of lithium - for the second stage of Pilgangoora’s development, set to begin in 2020, the firms said.

Great Wall also has the option to secure a further 75,000 tonnes a year of the mineral if it provides Pilbara with $50 million of debt financing for the project’s expansion.

“(The deal) 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,” Pilbara chief executive Ken Brinsden said in a statement.

Great Wall’s shares were suspended from trading on Friday. Pilbara’s shares jumped 16 percent to their highest level in over a year.

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Source(s): Reuters