Volkswagen Group will spend $69 million to acquire a 9.9% stake in lithium miner Patriot Battery Metals Inc. to secure raw materials for electric vehicles. The investment marks the European carmaker's first investment in the mining industry. [emphasis, links added]
This includes an agreement to supply 100,000 tons of lithium material to Volkswagen over 10 years, This represents a quarter of Patriot Battery Metals Canada's phase one production, according to the miner.
Patriot Battery Metals said the material will supply Volkswagen's battery plants in North America and Europe.
The investment shows Volkswagen is pushing ahead with electric vehicles despite falling sales.
European electric car sales rose 6.9% in October, but sales fell for the full year after policymakers reduced support for purchases.
Meanwhile, Volkswagen has pushed for frugal measures as it struggles to grow, including unprecedented plant closures in Germany.
Lithium producers have been hit hard by the slowdown in the electric vehicle market, with raw material inventories rising around the world. Miners have slowed expansion plans and cut projects due to weak prices.
However, Volkswagen's investment is the latest in a series of recent lithium deals, including Rio Tinto Group's $6.7 billion proposal to acquire Arcadium Lithium Plc in October.
Patriot Battery Metals is a Canada-based company that is looking to build a massive lithium mine in northern Quebec, 692 miles from Montreal. Last year, the company sold a 4.9% stake to Albermarle Corp., the world's largest lithium producer.
Read more in the Financial Post
