BYD, a Chinese EV manufacturer, invests $290 million in Chilean lithium project for mining rights.

Chinese EV Maker BYD Invests in Lithium Processing Plant in Chile

Chinese electric vehicle maker BYD has sent an engineering team to Chile to kick-start a massive lithium processing plant. This move is part of a broader investment shift by electric vehicle manufacturers worldwide, as they compete for limited access to critical minerals.

BYD announced its $290 million investment in April to build a new lithium carbonate processing facility in northern Chile. This strategic departure from BYD’s usual practice of processing materials in China is aimed at securing a stake in the lithium market.

The South American country’s government has granted BYD the status of a “qualified lithium producer,” providing the company with preferential prices and other strategic benefits not available to outside investors.

The new BYD plant is expected to start producing lithium iron phosphate for EV cathodes by the end of 2025. This development aligns with Chile’s efforts to play a more active role in the processing and manufacturing process, ensuring economic access and gaining a foothold in the growing battery industry.

Nationalizing the Lithium Industry

Chilean President Gabriel Boric announced earlier this year that the country would nationalize its lithium industry. This move aims to boost the country’s economy, ensure environmental considerations, and secure a stake in new projects.

“This is the best chance we have at transitioning to a sustainable and developed economy. We can’t afford to waste it,” said Boric during a televised address in April.

Other mineral-rich countries, including Argentina, Indonesia, and Zimbabwe, are also encouraging partnerships and enacting policies to retain value in the supply chain. They aim to process critical minerals domestically, creating jobs in technology and manufacturing.

The BYD plant in Chile is expected to create around 500 jobs and produce 50,000 tons of lithium iron phosphate per year for cathodes once it begins operations in 2025.

Securing Supply and Binding Agreements

The United States is also taking steps to secure its access to critical minerals. Ford, for example, has signed a binding agreement with lithium producer Ioneer to purchase lithium from its mining project in Nevada. General Motors has made a conditional investment in Lithium Americas’s mine in Nevada, securing exclusive rights to the extracted lithium.

These agreements reflect the auto industry’s recognition that the supply of EV minerals is shrinking rapidly, while demand is expected to skyrocket by 2030. Global demand for lithium batteries is projected to rise fivefold by 2030.

Chilean President Boric believes that the agreement with BYD will help protect the environment and ensure the fair distribution of mining benefits among indigenous communities. The national lithium strategy aims to build a more just Chile that shares the wealth generated by the industry.

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