China's BYD buys 18 pct stake in lithium miner (Reuters)Updated:...

China's BYD buys 18 pct stake in lithium miner
(Reuters)
Updated: 2010-09-17 09:05

Chinese car and battery maker BYD said it had acquired an 18 percent stake in Zhabuye Lithium for 201 million yuan ($29.89 million).

Zhabuye Lithium owns 20-year exclusive mining rights for the Zhabuye salt lake, the biggest lithium mine in China. Lithium is a key raw material in some rechargeable battery types.

The price of the deal represented about 2.6 times Zhabuye Lithium's book value, analysts said.

BYD, which is 10 percent owned by Warren Buffett's Berkshire Hathaway Inc (BRKa.N), said in a statement late Thursday that the acquisition would boost the competitiveness of its battery business.

In a note commenting on the deal JP Morgan analyst Charles Guo said BYD's vertical integration approach could reduce costs of lithium ferrous phosphate, which accounts for 40 percent of overall electric car battery costs.

In 2008, BYD bought a high-grade silicon ore mine in Shangluo, in the western province of Shaangxi, to extract solar-grade polysilicon.

($1=6.724 Yuan)