China's BYD holds mining rights in Brazil's Lithium Valley, documents show

Atlas Lithium

14/02/2025 03:00

* 
      BYD opens Brazil mining subsidiary, buys rights in two
plots in
2023 
    

        * 
      Plots next to Atlas Lithium project, half a day from new
BYD
factory
    

        * 
      Subsidiary in the research phase, with no operating
revenues
    

        * 
      Brazil lithium sector draws interest from U.S. and Saudis
    

  
    By Fabio Teixeira
       RIO DE JANEIRO, Feb 14 (Reuters) - Chinese electric
carmaker BYD  002594.SZ  acquired mineral rights for two plots
of land in a lithium-rich part of Brazil in 2023, entering the
mining business in its biggest market outside of China,
according to public records reviewed by Reuters.
    The EV producer's acquisition of mineral rights in Brazil is
its most concrete step so far toward mining strategic minerals
in the Western Hemisphere. 
        The previously unreported acquisition of the mineral
rights in late 2023 was made by BYD subsidiary Exploracao
Mineral do Brasil, which was created in May of that year,
documents showed.
        The plots are just a half-day's drive from BYD's new
factory project in northeast Brazil, which it also agreed to
invest in 2023. They also neighbor plots owned by U.S.-listed
miner Atlas Lithium  ATLX.O . 
        The subsidiary was created with a share capital of 4
million reais ($695,000) and turned a profit of about 213,000
reais from exchange rate variations in 2023, public registration
documents showed. 
        The company "is in the research phase, with neither
financial movement nor operating revenues," said a report from
an October shareholders meeting seen by Reuters.    
    BYD declined to comment on the matter. 
    BYD, which bought stakes in major Chinese miners, was one of
six firms allowed to bid on a Chilean lithium project last year,
and outlined plans for a lithium cathode plant in northern
Chile.
    Recent visits by U.S., Saudi and Chinese delegations have
underscored global interest in Brazil as an open market in the
geopolitical race for access to strategic minerals.
    Brazil has avoided a heavy state presence in its lithium
sector, unlike its South American neighbors, even easing export
controls on the metal in 2022. 
    Its best lithium prospects are hard rock deposits that lend
themselves to traditional mining, unlike tricky lithium
extraction from salt flats in Argentina, Bolivia and Chile.    
    BYD's prospecting for Brazilian lithium reinforces the scale
of its bet on Latin America's largest economy, where the firm's
major investment in a former Ford factory complex was tarnished
in December with accusations of labor abuses at the worksite.
    Last year, the Financial Times reported that BYD had talks
with Sigma Lithium  SGML.V , Brazil's biggest lithium producer,
over a possible supply agreement, joint venture or acquisition.
    
    LITHIUM VALLEY
    BYD's mineral rights cover 852 hectares (8.5 sq km) in the
town of Coronel Murta, part of the Jequitinhonha Valley in the
state of Minas Gerais known as Brazil's Lithium Valley.
    The neighboring Atlas Lithium project in Coronel Murta is in
the research phase after an initial geological mapping of the
area, the firm said on its website in June.
        Atlas CEO Marc Fogassa said he learned of BYD's presence
through a third party, but never directly discussed it with the
carmaker. 
    "If they invested in these two areas it is because they saw
the potential and this obviously makes my areas more valuable,"
Fogassa told Reuters.    
    Coronel Murta is around 825 km (512 miles) away, roughly a
12-hour drive, from the complex on the coast of Bahia state
where BYD is developing the factory with capacity to make
150,000 electric cars per year. 
    BYD has since it acquired the mineral rights, hired Minagem
Geologia e Mineracao, a local mineral research firm, public
documents show.
    Minagem said it would have to seek permission from the BYD
subsidiary to speak about the matter.
    It can often take between eight and 15 years for a mining
project in Brazil to start production if it is deemed
economically viable, according to attorney Luiz Fernando
Visconti of Visconti Law, a law firm specializing in
the mining sector.
    ($1 = 5.7568 reais)

 (Reporting by Fabio Teixeira in Rio de Janeiro, additional
reporting by Luciana Novaes Magalhaes in Sao Paulo
Editing by Brad Haynes and Marguerita Choy)
 ((Fabio.Teixeira@thomsonreuters.com; +55 21 99603-4782;))