China’s largest battery company CATL has agreed to pay A$55m for an 8.5 per cent stake in Australian lithium miner Pilbara Minerals, in a vote of confidence for a sector that has struggled with falling prices for the battery raw material.
Ningde-based CATL, which is listed on the Shenzhen stock exchange, will pay A$0.30 a share for 183.3m newly issued shares in the company, a 14 per cent discount to the stock’s closing price on Wednesday.
The fundraising comes following a brutal year for the lithium sector, which has been hit by a 17 per cent fall in the price of its main product, lithium carbonate, according to Benchmark Mineral Intelligence.
The capital will help Pilbara Minerals ramp up its main Pilgangoora asset and also fund a processing facility in South Korea to produce lithium hydroxide for batteries, which is being built with Korean steelmaker Posco. It will also help fund engineering studies on a “stage two” expansion of the Pilgangoora mine, it said.
“While there has been commentary talking down the current state of lithium markets, it has belied the significant interest we have continued to see from the strategic players in the lithium-ion supply chain and their focus on lithium raw material supply,” Ken Brinsden, managing director of Pilbara, said.
Following the deal CATL has “indicated its willingness” to buy lithium from Pilbara Minerals, the company said. CATL also has the right to nominate one non-executive director to the board of Pilbara.
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