SHANGHAI, Sep 28 (SMM) - On September 26, the Australian lithium mining company Greenwing Resources announced that it has reached a strategic financing transaction with Blue Northstar Limited, a wholly-owned subsidiary of NIO) to accelerate its San Jorge Salt Lake project in Argentina. And NIO will be the company's potential partner and underwriting partner. It is reported that the San Jorge project is located in the lithium triangle area, with a prospecting right of about 360 square kilometres.
Source: Greenwing Resource Ltd. website
This agreement can be divided into two parts:
1. Share subscription: NIO will pay A$12 million to Greenwing to subscribe for 21,818,182 shares of Greenwing at a placement price of A$0.55 per share, and NIO will hold 12.16% of its shares upon completion;
2. Call option: NIO can also obtain a call option to subscribe for a 20%-40% stake in the San Jorge Salt Lake Project. The option can be exercised within 365 days after the release of the JORC report for the San Jorge Salt Lake Project, or at an exercise price of $40-80 million if the contract is reached. Meanwhile, Greenwing will ensure that the JORC report will be released by December 31, 2023.
After the option is exercised, NIO will directly purchase the products of the Salt Lake project based on its then effective equity interest in Andes Litio.
The imbalance between supply and demand caused by the shortage of lithium resources has become a industrial consensus. It has been a new trend for terminal players to step into upstream fields in order to establish a stable lithium supply chain system, reduce production costs and ensure resource supply through the integration of upstream resources. In this battle for lithium resources, NIO is not the first car company that tries to secure lithium supply. Long before NIO, international leading car companies like Tesla, BYD, BMW, Great Wall Motor, Renault have positioned themselves in lithium resources (the following are only part of the cases):
1. Tesla: It partners Ganfeng Lithium and Yahua Group to form a stable supply cooperation for lithium hydroxide; in terms of resource layout, it has signed a 5-year underwriting agreement with Liontown to purchase a total of 700,000 mt of spodumene concentrate starting from 2024; a 4-year underwriting agreement with Core for spodumene concentrate, with a cumulative supply of 110,000 mt; and a 5-year underwriting agreement with Piedmont.
2. BYD: It strategically invested in Chengxin Lithium Energy and signed a cooperation agreement with Youngy Group; invested in 18% of the shares of Zabuye Lithium; established a joint venture with Lanke Lithium to jointly build a 30,000-mt salt lake project; invested in 6 spodumene mine in Africa; invested in the Yichun resource development project.
3. BMW: It is deeply bound Ganfeng Lithium and Livent, and signed a memorandum of understanding with European Lithium to obtain 100% lithium hydroxide output for its integrated project.
4. Great Wall Motor: It cooperated with pilbara through equity investment and signed a 6-year spodumene concentrate underwriting agreement with an annual guaranteed supply of 20,000 mt; its subsidiary SVOLT Energy signed a strategic cooperation agreement with Ganfeng Lithium to carry out multi-dimensional cooperation in lithium salt supply and sales as well as resource development.
5. Renault: It signed a 6-year underwriting agreement with Vulcan for the supply of 26,000-32,000 mt of lithium products from starting from 2026.
Compared with the positioning pace of many established car companies, NIO is currently running to catch up as a latecomer. But as a new force in Chinese car manufacturing, NIO is a pioneer in the competition for lithium resources. Up to now, the upward positioning of new car making forces have stalled in the battery field, and only few new forces have set their foot in mineral resources field.
As the price of lithium continues to rise in the second half of the year, the battle for lithium resources is still heated. How long will this war last?
