Commodities giant Glencore Plc is in advanced discussions to provide financing for a lithium processing plant in Argentina being developed by French miner Eramet SA.
In exchange for its investment, Glencore would secure future supplies of the crucial battery ingredient.
The lithium plant, a joint venture between Eramet and China’s Tsingshan Holding Group Co, is part of a global effort to meet the growing demand for lithium, which is essential for the electric vehicle industry.
The anticipated supply shortage in the coming years has prompted companies to secure long-term contracts with producers.
Although not involved in lithium mining, Glencore has established lithium companies and seeks to expand its presence in the market.
The specific details of Glencore’s investment and the amount of lithium it will receive from the purchase agreement are currently undisclosed.
Both Glencore and Eramet have acknowledged the ongoing discussions with potential partners, including Glencore, to determine the most advantageous offer for Eramet.
Glencore, one of the largest commodity traders globally, frequently enters into agreements with producers to secure future supplies.
While Glencore’s involvement in lithium primarily lies in its recycling plants, it aims to strengthen its position in the lithium market.
This deal aligns with the automotive industry’s increasing focus on securing lithium supplies.
Automakers like Ford and General Motors are seeking direct agreements with miners to ensure a stable supply chain, deviating from traditional procurement methods.
The lithium processing plant, estimated to cost over €700 million ($763 million), is being constructed by Eramet and Tsingshan, the world’s largest nickel and stainless steel producer.
Production is expected to commence in the second quarter of next year, with full capacity expected by mid-2025.
Eramet and Tsingshan plan to decide later this year whether to expand the plant’s capacity threefold.
With information from Bloomberg