Lithium Australia NL (ASX:LIT) has inked a letter of intent with Chinese battery producer DLG Battery Co Ltd (DLG) to form an equal-share joint venture to supply DLG’s batteries to the Australian market.
A venture would allow DLG lithium-ion batteries (LIBs), packs and modules to be sold in Australia.
The companies also plan to form a technology alliance to fast track commercialisation of Lithium Australia’s manufacturing subsidiary VSPC Ltd’s cathode powders in DLG batteries.
The companies’ proposed 50:50 joint venture for DLG LIB packs and module sales in Australia would be called Lithium Australia DLG.
Lithium Australia views the proposed JV and alliance relationship as a “major step” towards its commercial goal to be a major provider of battery materials and recycling solutions for the energy storage industry.
DLG is one of the 10 largest battery manufacturers in China and represents a compelling partner to align with in JV and technology collaborations.
The proposed JV partner has six development and manufacturing facilities in China and sales and support offices in the North American US market and Europe.
Lithium Australia 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.”
Griffin highlighted the company’s wholly-owned subsidiary VSPC had developed cathode materials energy storage using LIBs and argued the partnership with leading battery producer DLG had “vindicate[d] the development efforts undertaken by the company to commercialise this opportunity.”
He said: “We look forward to developing a critical supply-chain solution with our internationally respected partner DLG.”
DLG develops and manufactures cylindrical LIB cells, packs and systems.
Its 50-product line outputs include lithium-iron-phosphate (LFP) and lithium-nickel-manganese-cobalt (NMC) battery cells, battery-management systems and pack technologies.
The products are used in consumer electronics, electric vehicles, energy storage systems and e-bikes by customers in each major world market.
Lithium Australia has been working with DLG to test VSPC’s cathode powders from the subsidiary’s pilot plant in Brisbane, Australia.
DLG used the VSPC-made powders to manufacture commercial LFP cells in China.
A key output for the proposed joint venture is a business plan on how to serve emerging LIB demand from the Australian market.
The companies hope to ameliorate existing supply chain constraints for LIB batteries, packs and modules that enter the local market.