Chinese electric-car juggernaut BYD Co. is deploying an engineering team as part of a project to start processing lithium in Chile, home to the world’s biggest reserves of the metal that’s a key component in EV batteries.
The move is part of plans by BYD, already the world’s second-largest battery maker, to build a $290 million lithium cathode factory in northern Chile. Most of the company’s processing has been concentrated in China, so moving into the South American country will allow it more strategic access to the lithium reserves.
BYD in April was granted access to preferential prices for lithium carbonate in the country. The Chilean government awarded the special status specifically because of the plans to build the plant, which is set to begin making lithium iron phosphate for cathodes by the end of 2025.
“Now we are sending the engineering team to do the feasibility study and to choose the site,” executive vice president Stella Li said in an interview from Bloomberg’s offices in Sao Paulo.
Makers of EVs and rechargeable batteries are reaping the benefits of surging demand in the shift away from fossil fuels. But they’re also facing tight markets for raw materials. In a bid to lock in future supplies, they’ve started to fund more mining and processing projects.
In Chile, BYD is completing final contracts for its project at a time when the country’s government is adopting a new model for lithium extraction that will give the state a stake in new endeavors. At the same time, the government is stepping up efforts to encourage downstream investments.
BYD is willing to work with Chilean authorities, including offering its technology to the government, Li said.
Thanks to being granted the status of specialized lithium producer, BYD will be able to access preferential prices for 11,244 metric tons a year of battery-grade lithium carbonate until 2030 from Chile’s SQM, the world’s No. 2 lithium producer.
(By James Attwood and Leonardo Lara, with assistance from Vanessa Dezem)