An Argentine state-owned company will provide Gotion with prospecting and mining rights to explore a potential lithium resource of about 17,000 hectares.

In the age of electric vehicles, access to raw materials, including lithium, is of strategic importance to battery makers. Gotion High-tch (SHE: 002074), a Volkswagen-backed Chinese power battery supplier, has just seen significant progress in this regard.

Gotion recently signed a memorandum of understanding (MOU) with Argentina's state-owned mining company Jujuy Energía y Minería Sociedad del Estado (JEMSE), for cooperation in the lithium business, according to an announcement the company made today on the Shenzhen Stock Exchange.

(Image credit: Gotion High-tech)

The two parties aim to actively discuss the feasibility and cooperation modalities of conducting strategic cooperation regarding lithium mining in Argentina and reach consensus on potential cooperation, which will be further defined in the final agreement to be signed between the company and JEMSE, the announcement said.

JEMSE will do its best to provide Gotion with prospecting and mining rights for potential lithium mineral resources with an area of about 17,000 hectares and provide it with needed resources, according to the announcement.

Gotion plans to establish a battery-grade lithium carbonate refinery in Argentina, and JEMSE will secure the raw materials needed for the plant, such as industrial-grade lithium carbonate, brine concentrate, etc., according to the announcement.

JEMSE will also provide Gotion with power resources including electricity and natural gas, ensure smooth transportation and land availability.

The two parties will also cooperate in downstream business such as cathode materials and battery manufacturing in the future, the announcement said.

To ensure that the cooperation goes forward, JEMSE plans to participate in the establishment of the refinery as a shareholder, and the equity ratio will be negotiated separately between the two parties, according to the announcement.

The signing of the MOU is of great significance to the company's development of mineral resources, upstream industry chain layout and global industry development, which will help further increase global power battery market share, Gotion said.

Gotion has become the latest Chinese power battery giant to take action on securing lithium resources.

On April 20, a subsidiary of Contemporary Amperex Technology Co Ltd (, SHE: 300750), China's largest power battery maker, successfully bid RMB865 million ($135 million) for prospecting rights to a lithium mine in Yichun, Jiangxi province in eastern China.

The inferred porphyry ore resource is 960 million tons with 2.66 million tons of associated lithium metal oxide, according to CATL.

A prospecting right is the right to explore a mineral resource, which allows CATL to conduct exploration operations within a defined area and has priority access to mining rights for the mineral resource.

Gotion's power battery installed base in China in March was 0.93 GWh, ranking fourth with a 4.34 percent market share, according to data released last month by the China Automotive Battery Innovation Alliance (CABIA).

CATL's power battery installed base in China in March was 10.81 GWh, with a 50.49 percent market share, according to the data.