Lithium Australia NL (ASX: LIT), an Aussie lithium player and mineral explorer, announced on 9th May 2019, that the company has signed a (LoI) letter of intent with DLG (DLG Battery Co. Ltd), and established a 50:50 jointly owned business for the supply and sale of LIBs (lithium-ion batteries) manufactured by DLG, its’ packs and modules in Australia.
As per the company, it took a significant step, to move forward to become a significant provider of battery material and recycling solutions provider to the energy industry. Lithium Australia mentioned that DLG is one of the ten largest battery manufacturers in China and hosts six development and manufacturing facilities in China and sales & support office in the United States and Europe.
Lithium Australia further mentioned that DLG is a leading developer and manufacturer of cylindrical lithium-ion batteries, packs and systems. DLG also produces battery-management-system and pack technology, apart from conventional lithium-iron-phosphate and lithium-nickel-manganese-cobalt battery cell types. DLG holds above 50 issued patents and has developed a substantial intellectual property.
DLG sells products to various industries such as electric vehicles, energy storage, etc., where the demand for high-quality lithium-ion batteries is substantial and serves customers in every major world market.
Lithium Australia and DLG have been working in China, to test the cathode powders of lithium-iron-phosphate cell type, produced by the company’s wholly owned subsidiary- VSPC Ltd at its pilot plant in Brisbane, Australia. Besides, the company had recently launched PFS on Sadisdorf lithium deposit in Germany.
Along with DLG, the company has identified constraints in the supply chain of lithium-ion batteries in Australia, and they spot an exciting business opportunity in rectifying those constraints.
The 50:50-owned business will apply various supply-chain solutions, such as improving the availability of lithium-iron-phosphorus cell, maintaining local stock levels to meet demand and manufacture packs and modules indigenously. The company further plans to produce an Australian DLG/VSPC battery for both the domestic and global markets and offer a battery-recycling solution via the recycling business unit of the company.
Lithium Australia mentioned that as per the company’s undertaking to DLG, it would complete and design a plan to serve the demand of lithium-ion batteries in Australia, with a specific focus on energy-storage industry, as it is witnessing strong growth in Australia.
To establish the business with DLG, the company agreed to issue 12,500,000 shares of the company to DLG at the current market prices of 8 cents per share, to purchase an initial inventory of the battery.
Under the letter of intent, DLG will work with the company’s subsidiary to develop the cathode powders with a focus on lithium-iron-phosphorus cell type, which is ideal battery chemistry for the energy-storage industry in Australia.
The company and the counterpart, DLG have an intention to complete the required planning by 30th June 2019, and upon successful completion, Lithium Australia will mark a start in Australian marketing operations.
The stock of the company, by the end of the trading session, was at A$0.087 (as on 9 May 2019), up by 11.538% from its previous closing price.
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