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    Home Australia Western Australia Lithium Australia inks LOI with Top-10 Chinese battery manufacturer

    Lithium Australia inks LOI with Top-10 Chinese battery manufacturer

    Australian lithium producer Lithium Australia (ASX: LIT) has announced a milestone alliance with leading Chinese battery manufacturer DLG Battery Co. Ltd.

    According to the LOI inked with the Chinese battery producer, LIT and DLG will establish a 50:50 jointly owned business (Lithium Australia DLG) for the supply and sale of DLG LIBs, packs, and modules in Australia and form a technology alliance to fast-track the commercialisation of batteries.

    Lithium Australia said that it considers this partnership to be an important step forward in its aim of becoming a major provider of battery materials and recycling solutions to the fast-growing energy storage industry.

    Lithium Australia DLG is expected to commence its Australian marketing operations soon after the required planning is completed around 30 June 2019.

    VSPC, part of LIT

    Very Small Particle Company (VSPC) Ltd is a wholly-owned subsidiary of Lithium Australia. The company focuses on the production of nano-scale lithium iron phosphate material for use in the generation of rechargeable batteries for various types of electric vehicles.

    DLG Battery Ltd

    DLG is one of the 10 largest battery manufacturers in China. The company is a leading developer and manufacturer of cylindrical LIB cells, packs and system.

    DLG produces lithium-iron-phosphate (LFP) and lithium-nickelmanganese-cobalt (NMC) battery cell types, as well as battery-management-system and pack technology. DLG sells high-quality LIBs for use in consumer electronics, electric vehicles, energystorage systems, e-bikes, and many other applications.

    Terms of LOI

    LIT said that a letter of intent (LoI) has now been signed with DLG Battery Co. Ltd to set up a supply and sales JV as well as a technology alliance. This partnership is anticipated to rectify the prevailing constraints in the delivery of LIBs into the Australian supply chain.

    As per the LOI, LIT and DLG will establish a 50:50 jointly owned business, ‘Lithium Australia DLG’, for the supply and sale of DLG lithium ion batteries (LIBs), packs and modules in Australia, and form a technology alliance that will fast-track the commercialisation of VSPC Ltd’s patented cathode powders for use in DLG batteries.

    Lithium Australia has agreed to purchase an initial battery inventory through the issue of 12,500,000 Company shares to DLG at the prevailing market price of 8 cents per share. LIT also said that it will complete a business plan designed to service the burgeoning demand for LIBs in Australia with a particular focus on the energy-storage industry.

    Technological Cooperation

    Recently, in China, DLG has been testing the LFP cathode powders produced by VSPC Ltd at Brisbane, Australia. DLG used the VSPC powders to manufacture commercial LFP cells in China. DLG said that it plans to work with Lithium Australia to further develop VSPC’s cathode powders, with an initial focus on LFP.

    DLG is expected to award VSPC preferred supplier status to provide LFP powders for the manufacture of DLG LIBs at DLG’s manufacturing facilities in China subject to certain performance and cost hurdles being met.

    Timeline for Start of Operations

    LIT and DLG reported that they intend to complete the required planning by 30 June 2019. Once done, the Lithium Australia DLG is expected to commence its Australian marketing operations shortly thereafter.

    It may be noted that the LoI governing this cooperation is subject to final definitive and binding documentation, completion of which is anticipated during the business planning process.

    MD Statement

    LIT’s Managing Director Adrian Griffin said: “Lithium Australia’s partnership with DLG will provide us with first-mover advantage in the supply of batteries designed specifically for Australian conditions and create a stable supply chain. That will provide equipment manufacturers with regular and reliable supplies of LIBs held as stock in Australia.

    Australia is already established as a world leader in the take-up of energy storage using LIBs. Lithium Australia, through its subsidiary VSPC, has developed superior cathode materials that provide the performance required for this application, under conditions of high ambient temperatures. Our partnership with DLG, a leading Chinese battery producer, vindicates the development efforts undertaken by the Company to commercialise this opportunity.

    We look forward to developing a critical supply-chain solution with our internationally respected partner DLG.”

    Jonathan Norris
    Jonathan Norris
    Jonathan is a founder of Mining.com.au and has been covering the resources industry since 2018. With over 17 years experience in print, broadcast and online media, Jonathan has seen first hand the transformative effect of online niche media.

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