The resource-full Mister Li

The resource-full Mister Li

Here's something doubly interesting from Xinhua, which is controlled by China's Communist Party. Doubly interesting as it concerns Li Shufu, the hugely wealthy individual who owns Volvo Car Corporation via his majority share of its parent, Geely Holding.

The newswire's tone is neutral and simply states that Mr Li is personally investing in a company called Galaxy Resources. The Australian firm's main business is lithium compounds. This metal is crucial to the manufacture of certain types of advanced battery cells, and demand for it is expected to rise enormously in the short to medium term.

Xinhua states that Strong Target International, a firm owned by the Geely and VCC CEO has just paid A$30m (US$31.7m) for Galaxy bonds. Further, Fengli Group, a steel company in Zhejiang, the same province where Geely has its HQ, subscribed to the remainder of the A$69m bond issue.

Galaxy Executive Director Anthony Tse is reported as stating that the company's major clients are China-based enterprises which have a total annual demand for 12,000 tons of lithium.

Geely, meanwhile, has been restructuring its operations and brands in China, culling older, low-cost models and accelerating plans to roll out more new energy and other premium-priced models.

By 2020, Geely plans to be selling two million cars annually versus the 415,000 it sold in 2010. Of that future total, perhaps ten percent is a realistic, possibly conservative estimate of how many EVs it could be building by then. VCC is already testing plug-in C30 models; Geely has shown several car-with-a-cord concepts of its own.

Is buying into a firm involved with a strategic resource needed to manufacture automotive batteries a clever move? Twenty five years ago, this man was selling fridge parts, as Volvo Cars pragmatically informs visitors to its website. It will take only a fraction of that time for industry watchers to find out just how clever or otherwise Mr Li's punt on lithium turned out to be.

Author: Glenn Brooks