CATL, the world’s largest battery maker, has sold its nearly 5% stake in Australian lithium producer Pilbara Minerals Ltd for A$601 million ($405.31 million), according to a term sheet reviewed by Reuters on Thursday.
CATL bought its 4.9% holding for A$0.30 cents a share in the depths of the 2019 lithium downturn. It sold the stake, representing 146 million shares, in a block trade at A$4.10 per share, netting CATL A$555 million from its original investment. Goldman Sachs and UBS were bookrunners on the deal.
Pilbara Minerals declined to comment. CATL had no immediate comment.
The sale does not impact the battery maker’s access to Pilbara’s lithium supply. Pilbara in 2020 agreed to a five year offtake agreement with battery chemicals maker Yibin Tianyi in which CATL is a major shareholder.
Given CATL’s lithium access is secure, industry sources said the sale was more likely about booking profits given a slide underway in prices of lithium and its producers.
“You’d think at face value that their expectation is that prices are going to fall,” said analyst Dan Morgan at investment bank Barrenjoey in Sydney.
In a move that has accelerated a slide in lithium prices, CATL has offered smaller Chinese electric-vehicle makers discounted prices on batteries for terms that include a built-in assumption that prices of lithium carbonate, a key component in auto batteries, would more than halve, sources told Reuters last month.
Shares in Pilbara Minerals, which closed on Wednesday at A$4.21, fell as much as 5.9% before trimming losses to A$4.08, down 3.1% by 0440 GMT.
($1 = 1.4828 Australian dollars)
(By Scott Murdoch and Melanie Burton; Editing by Muralikumar Anantharaman and Lincoln Feast)
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