The world’s largest lithium battery producer, China’s CATL, has announced the creation of a separate mining division. The new entity, called Shidai Resources Group, will receive a registered capital of $4.4 billion. According to the Financial Times, the move is intended to strengthen control over supply chains of critical metals amid growing geopolitical tensions.
The news caused a sharp growth of CATL shares on the Hong Kong Stock Exchange – by more than 10%. At the same time, the company’s quarterly report also exceeded analysts’ expectations.
Since its founding in 2011, CATL has already invested billions in access to lithium and nickel through internal divisions. Now these assets are being spun off into a separate legal entity. The aim is to boost exploration both in China and abroad. The company said Shidai Resources Group intends to participate in quality mining projects around the world to ensure supply stability and value chain security.
The decision comes amid intensifying competition between Beijing and Washington for access to materials needed to produce electric cars, batteries, semiconductors and even missiles. Since Donald Trump’s return to the White House, the US has made domestic mining of critical minerals a priority. China, for its part, has been increasing exploration subsidies and expanding access to mineral resources in pursuit of economic self-sufficiency.
Bernstein analysts note that the strengthening of CATL’s position in the mining industry is due to the expectation of high demand for resources and the instability of global metal markets. The creation of Shidai Resources Group will help smooth the effects of price fluctuations and support long-term growth.
The company’s financial performance confirms the correctness of the chosen strategy. CATL’s first-quarter net profit rose 48; year-on-year to 20.7 billion yuan, well above forecasts. Revenue jumped 52; to 129.1 billion yuan. Although demand for electric vehicles in China has been slowing in recent months, the company has been helped by strong demand for energy storage systems, including for artificial intelligence-powered data centers. CATL forecasts annual growth in battery industry capacity of 20-30; in the next five years.
Thus, the creation of a specialized mining division is a strategic move that not only strengthens raw material independence but also enables CATL to maintain its leadership in turbulent global markets.
Source: Financial Times
Image: CATL
