SoftBank moves into lithium with Canada mine investment
Japanese conglomerate to take 9% stake in Toronto-listed Nemaska
Edward White in Taipei and Henry Sanderson in London
Financial Times
April 5, 2018
SoftBank has made its first foray into lithium, a key material for electric vehicle batteries, buying a minority holding in a Canadian miner.
The Japanese tech-to-finance conglomerate will acquire up to a 9.9 per cent interest in Toronto-listed Nemaska Lithium for C$99.1m (US$77.7m), in a deal that also secures an option to buy the metal from Nemaska’s Whabouchi mine in Québec.
The move comes after SoftBank has built up stakes in major ride-sharing companies, including Uber, Chinese group Didi and Singapore-based Grab
Masayoshi Son, SoftBank’s chairman, described the investment as of “monumental importance” to the company’s strategy.
“By investing in lithium resource development, SoftBank intends to contribute to the growth of the battery industry in view of increasing demand for smartphones and other communication devices and the anticipated Mobility Revolution to be ushered in by electric vehicles,” SoftBank said.
Electric vehicle and energy storage companies are racing to take greater control of the lithium supply chain, as demand for the white metal is set to more than triple by 2025.
Larger batteries for electric cars, which will allow them to drive further on one charge, will require increasing amounts of lithium, according to Goldman Sachs. It expects demand for lithium to rise to about 800,000 tonnes a year by 2025, from 220,000 tonnes last year.
In March, China’s largest battery maker, Contemporary Amperex Technology, took a controlling stake in another Quebec lithium project, North American Lithium.
Despite the rosy outlook for electric cars, however, shares in lithium miners have fallen this year on fears of oversupply, after Chile’s largest producer SQM was granted the right to expand its output in January.
Shares in Nemaska Lithium have fallen 50 per cent year-to-date to trade at C$1.17.
SoftBank bought the shares at C$1.12, Nemaska Lithium said.
The Canadian group needs to raise between $775m and $825m to fund the construction of the Whabouchi mine as well as a processing plant that will create high-purity lithium for batteries. The mine is expected to start production in 2021.
The company is looking to raise up to $350m in debt financing, $150m via a streaming transaction — in which a buyer pays upfront to secure a portion of the mine’s future output — as well as additional private and public equity offerings, it said.
“As a global technology pioneer and leader, SoftBank’s culture of innovation melds very well with our own corporate values and is a clear endorsement of our approach to producing environmentally friendly, low-cost lithium compounds,” said Guy Bourassa, chief executive of Nemaska Lithium.
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