Smooth sailing is challenging. It seems that BYD, which has been a lot of good news recently, for example, BYD established an automotive battery joint venture with FAW Group and BYD posts strong EVs deliveries in December and Full year, and BYD is set to have 8 factories operating in 2022, with an annual capacity of more than 3 million, encountered issue on lithium contract in Chlie earlier.
As we all know, in addition to automobiles, BYD’s brand of battery energy storage equipment is also a major source of income for the company. Its most well-known and iconic blade battery based on lithium iron phosphate technology is a leader in related industries. The battery business is closely following CATL, which has the largest installed capacity of lithium batteries globally. However, earlier, the mining right of lithium battery’s most important raw material, lithium, was temporary frozen by the Chilean regional government.
According to AFP, the mining totalling 80,000 tonnes lithium mine was halted because of an appeal by the governor of Copiapo state, where the lithium mine is located, and by indigenous communities near the Salar de Atacama. They believe that the plan violates the principles of environmental protection and economic development.
However, some people also believe that such a suspension of mining operations is because the current conservative President Sebastian Pinera, who led the bidding plan, has only the last two months of office. The newly elected President Gabriel Boric once advocated strengthening state regulation, increasing the royalties of mining enterprises, opposing the privatization of mineral resources, and promoting a state-run lithium company during the election campaign. This adds to the uncertainty of much foreign capital coming in for the Chilean mining industry, which has the world’s largest lithium reserves.
If this contract can still be executed smoothly in the end, it would provide BYD with a reliable source of lithium for decades, providing the company with a significant competitive advantage. But suppose the result is not as expected. In that case, BYD’s battery business will undoubtedly be severely hit.
Noteworthy Whether the Chinese government will intervene.
