Lithium Australia teams up with Chinese battery producer to sell lithium-ion batteries into Australia

Lithium Australia ASX LIT Chinese battery producer DLG
Lithium Australia and DLG Battery Co Ltd will join forces to provide lithium-ion batteries and their components to Australian consumers and manufacturers.

As it rapidly advances its proprietary technology, Lithium Australia (ASX: LIT) has now teamed up with Chinese battery producer DLG Battery Co Ltd to establish a joint venture business that will supply and sell lithium-ion batteries, packs and modules throughout Australia.

The duo has inked a letter of intent with the equally owned joint venture company to be called Lithium Australia DLG.

“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,” Lithium Australia managing director Adrian Griffin explained.

“Australia is already established as a world leader in the take-up of energy storage using lithium-ion batteries.”

“Lithium Australia, through its subsidiary VSPC, has developed superior cathode materials that provide the performance required for this application, under conditions of high ambient temperatures,” he said.

DLG has already been working with Lithium Australia to test its lithium-iron-phosphate powders that VSPC has produced at its pilot plant in Brisbane.

Testing involved DLG using VSPC’s powders to create commercial lithium-iron-phosphate batteries in China.

“Our partnership with DLG, a leading Chinese battery producer, vindicates the development efforts by the company to commercialise this opportunity,” Mr Griffin said.

Under the alliance, Lithium Australia has agreed to purchase initial battery inventory via the issue of 12.5 million shares to DLG at the prevailing price of $0.08 each.

Entering Australia

Both DLG and Lithium Australia have identified hurdles to the delivery of lithium-ion batteries into Australia’s supply chain.

Prior to entering Australia, DLG will complete a business plan that will adequately service lithium-ion battery demand and the rapidly growing energy storage industries.

In order to overcome the supply difficulties, the new joint venture entity will improve the availability of lithium-iron-phosphate and lithium-nickel-manganese-cobalt batteries to consumers and manufacturers throughout Australia.

The duo will do this by ensuring stock levels are maintained to meet demand, as well as manufacturing packs and modules within Australia.

Additionally, the joint venture will look at producing a DLG/VSPC battery for local and global markets, and offer a battery-recycling solution through Lithium Australia’s recycling business.

Technology collaboration

As well as marketing and distribution throughout Australia, Lithium Australia and DLG will collaborate on further cathode and battery development.

DLG and Lithium Australia will initially focus on VSPC’s lithium-iron-phosphate cathode powders, which Lithium Australia claims are the ideal battery chemistry for Australian energy storage applications, due to the formula being less prone to thermal runaway and fires compared to other lithium-ion battery combinations.

Lithium Australia also noted that lithium-iron-phosphate batteries demonstrate “superior longevity” and operate reliably at elevated temperatures.

If performance and cost hurdles have been met, DLG will award VSPC preferred supply status for its lithium-iron-phosphate powders.

DLG will use the powders to manufacture batteries at its facilities in China.

Who is DLG?

DLG is one of China’s largest battery manufacturers and is among the top 10 producers. The company has six facilities in the country and sales and support offices throughout the US and Europe.

The Chinese manufacturer’s products are used globally in consumer electronics, electric vehicles, energy storage systems, e-bikes and other applications that require high-quality lithium-ion batteries.

Shoring up its global manufacturing and distribution capability, is DLG’s intellectual property, with the company owning more than 50 patents.

The joint venture is expected to be made binding once planning has been completed by the end of June, with Australian marketing operations to begin shortly after.

“We look forward to developing a critical supply-chain solution with our internationally respected partner DLG,” Mr Griffin said.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.