Lithium Americas expands in Argentina, will buy Millennial for US$400 million

RIO DE JANEIRO, BRAZIL – Lithium Americas Corp is to buy Argentina’s Millennial Lithium Corp for US$400 million in shares and cash, beating an offer from China’s Contemporary Amperex Technology Co Ltd (CATL), as demand for the metal used in electric vehicle (EV) batteries rises.

The deal is announced a day after the deadline for CATL to respond to Lithium Americas’ bid for Millennial expired. CATL is the world’s largest electric vehicle battery manufacturer, but does not produce lithium.

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Lithium Americas shares were up 3.5% Wednesday, while Millennial shares fell about 3%. Lithium Americas said it believes the fact that it is headquartered in Canada played in its favor.

“This transaction has less regulatory risk than CATL or another Chinese company. Like it or not, there are critical mining strategies by the U.S., Canadian and Australian governments that could have played a role in this,” Jon Evans, Lithium Americas’ chief executive told Reuters.

Evans said he does not expect CATL to challenge the deal. “This is a great expansion opportunity for us in Argentina,” he said, adding that the company expects to begin construction within two years. Once operational, the project is expected to produce 24,000 tons per year of battery-grade lithium carbonate for 40 years.

Lithium Americas has been building the Cauchari lithium project in Argentina with Ganfeng Lithium Co – its largest shareholder – near the Millennial lithium deposit, which made the purchase even more attractive, Evans said.

“I don’t think you’re going to see opportunities like this in the future, at least not at the valuations we have here,” he said.