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Lithium Australia forms alliance with Chinese battery producer DLG

Lithium Australia has signed a letter of intent with Chinese battery producer DLG Battery Co. Ltd. to establish a 50:50 jointly owned business for the supply and sale of DLG lithium-ion batteries (LIBs), packs and modules in Australia; and to form a technology alliance that will fast-track the commercialization of VSPC Ltd’s patented cathode powders for use in DLG batteries.

As one of the 10 largest battery manufacturers in China, DLG has six development and manufacturing facilities there, as well as sales and support offices in the United States and Europe. DLG is a developer and manufacturer of cylindrical LIB cells, packs and systems, producing not only lithium-iron-phosphate (LFP) and lithium-nickel- manganese-cobalt (NMC) battery cell types but also battery-management-system and pack technology.

DLG sells products for use in consumer electronics, electric vehicles, energy-storage systems, e-bikes and other applications, and has customers in every major world market.

DLG has been working withLithium Australia to test (in China) LFP cathode powders produced by VSPC Ltd (a wholly owned subsidiary of Lithium Australia) at its pilot plant in Brisbane, Australia. DLG used the VSPC powders to manufacture commercial LFP cells in China.

Under the LoI, DLG and Lithium Australia intend to incorporate Lithium Australia DLG as a 50:50-owned business, the aim of which is to ameliorate supply chain constraints for LIB batteries, packs and modules entering the Australian market. The new Lithium Australia DLG business will apply the following supply-chain solutions:

  • Improve the availability of LFP and NMC LIBs to equipment manufacturers and consumers in the Australian market.

  • Maintain local (Australian) stock levels to meet demand.

  • Manufacture packs and modules within Australia.

  • Produce an Australian DLG/VSPC battery for both local and global markets.

  • Offer a battery-recycling solution through Lithium Australia's recycling business unit.

As part of the Company’s undertaking to DLG, it will complete a business plan designed to service the burgeoning demand for LIBs in Australia. There will be a particular focus on the energy-storage industry, a sector in which Australia is experiencing strong growth.

As part of establishing the business, 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.

Technology alliance. Under the LoI, the parties will facilitate technological cooperation between VSPC and DLG for both cathode and battery development. DLG will work with Lithium Australia to further develop VSPC’s cathode powders, initially with an initial focus on LFP, the ideal battery chemistry for Australian energy-storage applications.

LFP is very safe (not prone to thermal runaway and fires), demonstrates superior longevity and operates reliably at elevated temperatures. Subject to certain performance and cost hurdles being met, DLG will award VSPC preferred supplier status to provide LFP powders for the manufacture of DLG LIBs at DLG’s manufacturing facilities in China.

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