Lithium Australia has signed a letter of intent (LoI) with leading Chinese battery producer DLG Battery Co to establish a 50:50 jointly owned business for the supply and sale of DLG lithium-ion batteries (LIBs), packs and modules in Australia, and form a technology alliance that will fast-track the commercialisation of VSPC’s patented cathode powders for use in DLG batteries.

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Adrian Griffin, of Lithium Australia, and Jeffery Wu, of DMG, signing the LoI

As one of the 10 largest battery manufacturers in China, DLG is a leading developer and manufacturer of cylindrical LIB cells, packs and systems, producing not only lithium-iron-phosphate (LFP) and lithium-nickel-manganese-cobalt (NMC) battery cell types, but also battery-management-system and pack technology.

DLG has been working with the Lithium Australia to carry out tests in China of the LFP cathode powders produced by VSPC Ltd – a wholly owned subsidiary of Lithium Australia – at its pilot plant in Brisbane, Australia. DLG used the VSPC powders to manufacture commercial LFP cells in China.

“Lithium Australia's partnership with DLG will provide us with first-mover advantage in the supply of batteries designed specifically for Australian conditions and create a stable supply chain. That will provide equipment manufacturers with regular and reliable supplies of LIBs held as stock in Australia,” said Mr Adrian Griffin, Lithium Australia Managing Director.

Together, DLG and Lithium Australia have identified constraints in the delivery of LIBs into the Australian supply chain, and they see an exciting business opportunity in rectifying those supply difficulties.

"Australia is already established as a world leader in the take-up of energy storage using LIBs. Lithium Australia, through its subsidiary VSPC, has developed superior cathode materials that provide the performance required for this application, under conditions of high ambient temperatures. Our partnership with DLG vindicates the development efforts undertaken by the company to commercialise this opportunity,” continued Mr Griffin.

Under the LoI, DLG and Lithium Australia intend to incorporate 'Lithium Australia DLG' as a 50:50-owned business, the aim of which is to ameliorate supply chain constraints for LIB batteries, packs and modules entering the Australian market.

As part of the Company's undertaking to DLG, it will complete a business plan designed to service the burgeoning demand for LIBs in Australia. There will be a particular focus on the energy-storage industry, a sector in which Australia is experiencing strong growth.

And, as part of establishing the business, Lithium Australia has agreed to purchase an initial battery inventory through the issue of 12,500,000 company shares to DLG at the prevailing market price of 8 cents per share.

The Company and DLG intend to complete the required planning by 30 June 2019. A successful outcome will result in Lithium Australia DLG commencing its Australian marketing operations shortly thereafter.


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