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Business deals

Toyota Tsusho buying chunk of Australian lithium miner

Toyota group trading house eyes grip on key battery material

Technicians work on an evaporation pond test in the salt flat at the Olaroz. Argentina has among the world's largest reserves of lithium, a key mineral used in rechargeable batteries that power hybrid and electrified vehicles, as well as consumer electronics.   © Reuters

NAGOYA -- Toyota Tsusho will acquire a 15% stake in Australian lithium-mining company Orocobre in hopes of securing stable supplies of the key mineral for eco-car batteries.

The Toyota Motor group member will invest some 292 million Australian dollars ($232 million) under plans announced Tuesday, taking the stake through such means as private placements.

Lithium is used in cathodes of rechargeable lithium-ion batteries. The growing popularity of electrified vehicles powered by such batteries is fueling demand for the metal.

The duo created a lithium exploration joint venture in 2012, and production at the Salar de Olaroz salt lake in Argentina began in late 2014. The site's current annual capacity of 17,500 tons amounts to roughly a tenth of global demand.

Toyota Tsusho and Orocobre plan to spend a total of 31 billion yen ($279 million), including proceeds from the share sale, to expand output capacity. The investment decision will be finalized by mid-2018. Expanded output would begin in the second half of 2019, with plans to eventually increase capacity by 140% from current levels to 42,500 tons a year. Toyota Tsusho will have exclusive sales rights to the lithium.

Electrified vehicles are gaining traction around the world as greener alternatives to autos powered solely by internal combustion engines. The British and French governments are moving to ban the sale of gasoline and diesel vehicles by 2040.

The global market for rechargeable lithium-ion battery materials is expected to more than double from 2016 levels to about 2.9 trillion yen in 2021, according to Tokyo-based information company Fuji Keizai.  Lithium prices have been on the rise thanks to strong demand.

As Chinese companies raise their stakes in resource projects, Toyota Tsusho seeks to sharpen its edge by securing stable supplies of lithium through strengthening its partnership with Orocobre.

(Nikkei)

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