Ningde Times’ Back-up Plan

For instance, CATL has also introduced new pricing agreements with its automotive OEM partners. Under these agreements, a portion of the automakers’ battery purchases is priced based on a lithium carbonate benchmark of RMB 200,000 per ton, while the remainder is priced at prevailing market rates—where domestic battery-grade lithium carbonate was then quoted at RMB 480,000 per ton. However, acceptance of this concessionary agreement comes with conditions: automakers must commit to sourcing no less than 80% of their battery requirements from CATL over three years and pay a certain percentage of the contract value as an advance. Back when He Xiaopeng personally camped out at CATL’s factories to secure battery supplies, automakers would have eagerly signed such contracts. But today’s conditions, environment, and landscape have all changed. CATL is no longer the undisputed ‘King of Power Batteries’ it once was. Multiple automakers have established their own battery subsidiaries, and other battery manufacturers have also secured significant OEM partnerships. Although CATL still has no shortage of collaborators, its recent aggressive moves have stirred up controversy—making it, for a time, a partner that both industry peers and capital markets prefer to avoid. How to break this impasse has thus become CATL’s most urgent priority. 2. Seeking Opportunities Abroad The first development that warrants serious concern is CATL’s plan to acquire lithium mines in Brazil. The Brazilian lithium mining project is indeed highly attractive. The Grota do Cirilo spodumene project—the largest and highest-grade hard-rock lithium deposit in the Americas—holds total resources of approximately 3.032 million tons LCE (lithium carbonate equivalent), grading 1.45% lithium oxide. According to schedule, the Grota do Cirilo spodumene project commenced trial operations in December 2022. Phase I is expected to produce 270,000 tons annually of high-purity, battery-grade spodumene concentrate—equivalent to roughly 36,700 tons LCE per year. Moreover, based on updated mineral reserve studies, Sigma Lithium reports the project could yield 768,000 tons of spodumene concentrate (104,000 tons LCE) between Years 2 and 8 of operation. Sigma Lithium—a Canadian mining company operating lithium extraction in Brazil’s Jequitinhonha Valley, Minas Gerais state—has Grota do Cirilo as its flagship asset. On December 18, 2023, Sigma announced that negotiations for the sale of its business had entered the final stage. While the deal was originally expected to close before year-end, the board now anticipates completion in 2024. According to Exame IN’s investigation, two consortia are currently in the final stages of acquisition talks. CATL and Volkswagen Group are viewed as the most likely buyers. Tesla reportedly attempted to engage Sigma but failed to make progress. As of now, Sigma trades on the Canadian Securities Exchange at a valuation slightly above USD 3 billion; its share price has declined 15% year-to-date amid falling lithium prices. This situation places considerable pressure on Zeng Yuqun’s judgment and composure. On one hand, he must rigorously assess the lithium mine’s resource advantages and long-term strategic value; on the other, he must anticipate Volkswagen’s bidding strategy and establish a psychological ceiling for his own offer. Thus, for Zeng—who has long been weighed down by domestic market-cap concerns—this moment may well call for checking into a hotel, resting both body and mind.

The Battle for Brazil’s Lithium Mines: BYD Directly Challenges ‘the King of Batteries’?

With accelerated lithium mining development in recent years, Brazil is poised to become the world’s fourth-largest lithium producer within a year. Its Grota do Cirilo lithium mine has drawn keen interest from industry leaders—including CATL and BYD—and is currently shaking up the global lithium-ion battery supply chain. The Grota do Cirilo lithium mine is developed by Sigma Brazil, a subsidiary of Canadian mining firm Sigma Lithium. Previously, Tesla, CATL, and Volkswagen had all expressed interest in acquiring Sigma Lithium. According to the Financial Times, BYD has recently joined this ‘bidding war.’ On January 16, Times Finance contacted BYD for verification regarding its potential acquisition of Sigma Lithium; BYD declined to comment. Earlier, a CATL representative told Times Finance, “Please refer to the Company’s official public statements.” In 2022, surging lithium carbonate prices and acute supply shortages triggered a global scramble for lithium resources—prompting battery makers and automakers alike to follow mining firms into upstream lithium investments. Although lithium carbonate prices have plunged over the past year, for industry leaders like CATL and BYD, investing in lithium mines remains a critical step toward vertical integration and supply-chain resilience. Against the backdrop of limited domestic lithium resources and expanding overseas operations, battery and automotive giants are expected to continue aggressively securing lithium assets abroad. Which corporate ‘rumor’ will ultimately materialize into a deal with Sigma Lithium? An answer may emerge by mid-February. Brazilian media outlet Exame reported that Sigma Lithium aims to finalize its sale agreement before the start of the Chinese New Year on February 10. 01 Persistent ‘Rumors’ Sigma Lithium is developing the Grota do Cirilo lithium mine in Brazil. After six years of development—from concept to reality—the mine began production in 2023 and, in November of that year, shipped 20,000 tons of ‘triple-zero green lithium’ (zero tailings, zero hazardous chemicals, zero carbon emissions) to Glencore. In earlier years—before any actual output—Sigma Lithium was dubbed a ‘PowerPoint lithium company’ by some media. Yet once real production commenced, it quickly became a coveted prize for global industrial titans. According to media reports, companies expressing acquisition interest in Sigma Lithium to date include Tesla, CATL, and Volkswagen—and most recently, BYD. Tesla was the earliest company linked to Sigma Lithium in rumors. In February 2023, Bloomberg cited informed sources reporting that Tesla was consulting potential advisors regarding a possible acquisition of Sigma Lithium. At the time, private equity fund A10 Investimentos—holding 46% of Sigma Lithium—was actively seeking buyers. Before this rumor solidified, however, Sigma Lithium itself began dropping hints. In November 2023, Sigma Lithium CEO Ana Cristina Cabral stated that several of the world’s most respected companies in the battery materials and electric vehicle sectors—including automakers and battery manufacturers—had shown strong interest in its business. A month later, new ‘rumor candidates’ emerged: CATL and Volkswagen.

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