Chinese BYD negotiates purchase of lithium mining company in Brazil

Chinese automaker BYD, the world’s largest electric car manufacturer, is in negotiations to buy a lithium mining company in Brazil.

The president of BYD in Brazil, Alexandre Baldy, told the British newspaper Financial Times (FT) that he had discussed with Sigma Lithium a possible supply agreement, joint venture or acquisition.

Sigma, which according to the FT is valued at US$2.9 billion (around R$14 billion), owns a mine in the Jequitinhonha Valley, in Minas Gerais.

Lithium is an essential metal in battery production and its demand is growing around the world. Controlling much of the supply chain, including mines, batteries and computer chips, is BYD’s strategy in China to sell high-tech cars at a low cost. The acquisition of a mining company could be an advantage in the electric car race in Brazil.

BYD intends to start producing vehicles in Brazil between the end of 2024 and the beginning of 2025. The company purchased the former Ford factory in Camaçari (BA). It will be its first unit outside Asia, with an investment of approximately R$3 billion.

BYD is backed by Warren Buffett’s Berkshire Hathaway, and earlier this year surpassed Tesla, then the world’s largest electric vehicle manufacturer, owned by Elon Musk.

Sigma also caught the attention of the South African businessman. In February 2023, it was reported that Sigma would be on Musk’s radar. Seven months later, the Brazilian company announced that it was evaluating sales proposals, but did not announce those interested, according to the FT.

Sigma plans to triple its annual production capacity to 270 thousand tons. However, during its first year of production, it recorded a net loss of US$19 million (R$94 million).

The top lithium-producing countries in 2022 were Australia, Chile, China and Argentina, followed by Brazil, according to Statista.

According to the FT, Baldy that there is an “active” dialogue with Sigma. “We are discussing different aspects about supply, a joint venture, an acquisition… nothing is concrete,” the executive told the British newspaper. Sigma declined to comment on the matter.

BYD’s plans in Brazil come as Chinese electric vehicle and renewable energy companies look to rapidly expand abroad.

The Shenzhen-based manufacturer also plans to build an electric vehicle factory in Hungary and has been negotiating a site in Mexico.