Pan Asia Metals and VinES assess development of lithium conversion facility in Vietnam

Pan Asia Metals (ASX: PAM) has achieved a significant milestone in its drive to become a force in the South East Asian rechargeable battery market with the signing of an agreement with a major Vietnamese group.

The Australian junior has successfully “inked” a non-binding Memorandum of Understanding (MoU) with VinES Energy Solutions Joint Stock Company (VinES), a subsidiary of Vietnam’s largest private conglomerate, Vingroup.

To run for an initial 36-month period, the MoU will see both organisations come together to assess the potential development of a 20,000 to 25,000 tonnes per annum standalone lithium conversion facility in Vietnam.

Lithium supplies

Pan Asia Metals has been charged with assessing the potential to secure additional lithium concessions and lithium oxide concentrate supply agreements to feed the lithium conversion facility.

The company has a range of lithium development projects in South East Asia within its portfolio.

Its lead project is Reung Kiet Lithium in southern Thailand, where drilling has identified extensive lepidolite pegmatite dyke/vein swarms.

Pan Asia Metals is drilling at two main prospects, Reung Kiet and Bang I Tum, where a combined prospective strike length of approximately 2.5km.

Initial metallurgical test work has already provided exceptional results.

The project was home to extensive open pit tin mining up to the 1980’s.

The company has also lodged five Special Prospecting Licence Applications (SPLA) in the Phang Nga Province in southern Thailand where lithium potential has been identified.

Joint project team

A joint project team will also be tasked to meet with third party feed providers of lithium feedstock under the MoU.

The proposed plant would be strategically located close to VinES battery plant in Vietnam.

Pan Asia has already commenced early feasibility studies into the requirements for the standalone lithium conversion facility, with assistance from Lithium Consultants Australasia.

Pan Asia and VinES will also establish a joint project team which will cover, amongst other things, project ownership, feedstock supply and offtake provisions.

Binding definitive agreement

The eventual aim of the MoU will be for the potential negotiation of agreed terms for a legally binding definitive agreement if the feasibility study confirms the project’s viability.

Pan Asia Metals’ chairman and managing director, Paul Lock said the signing of the MoU is a significant milestone in the company’s strategy focused on developing an integrated supply chain to cost-effectively deliver relevant and in-demand products to the lithium ion battery market in South-East Asia.

“As a company with a strong focus on South East Asia, we believe that VinGroup’s dedication to green mobility and technology makes VinES an ideal partner for Pan Asia Metals. We are excited about the potential to contribute to the development of the lithium supply chain in Vietnam through this collaboration, and in achieving our shared goals with VinES.”

VinES’ chief executive officer, Pham Thuy Linh said citing the proposed lithium conversion facility near the company’s existing operations in Vietnam was a strategic fit that will take advantage of the company’s established integrated supply chain.

“I believe the MOU with Pan Asia Metals shall continue to strengthen our position in accelerating the growth of business and seizing opportunities in the EV supply chain.”

South East Asian battery market attraction

South East Asia is one of the fastest growing destinations in the global battery development market.

The South East Asian lithium-ion battery (LiB) market is expected to register a CAGR of 15% between 2023 and 2028.

With a total population of over 600 million by the end of 2021, South East Asia has an overall economic growth rate higher than the global average and is one of the key drivers of future global economic growth.

Forecasters have estimated the size of South East Asia’s lithium battery industry will maintain strong growth from 2023-2032, with the region benefitting from a rapidly growing population and abundant labour resources and low production costs.

Vietnam a potential battery hub

Vietnam has been particularly highlighted as one of the key destinations for battery market growth due to its significant nickel reserves and its location near the facilities of a number of leading battery manufacturers.

Analysts have forecast the Vietnamese battery market will record a CAGR of more than seven per cent between 2022 and 2027.

Vingroup has already ramped up its battery manufacturing. Its EV start-up VinFast announced in June 2022 that it had signed a deal to initially invest US$2 billion to build a factory in North Carolina in the U.S. to make electric cars and buses, along with batteries for EVs.

VinES has also signed an MoU with Delta Lithium (ASX: DLI) signed an MOU with in late 2022 to supply 45,000 tonnes per annum of spodumene concentrate.