ACISA create joint venture to industrialize lithium

The aim of this joint venture was based on the sustainable extraction and industrialisation of lithium, as well as other raw materials from Salar de Uyuni, which stands as the world’s largest salt lake.

This joint venture will enable lithium hydroxide to be extracted from residual brine; and due to ACISA’s innovative process, technology has allowed it to be utilized in order to produce lithium hydroxide profitably with a high lithium yield that is suitable for use in batteries.

Interview with Dr Anton M. Ostler at ARNECKE SIBETH DABELSTEIN

Please tell me about your involvement in the deal?

ARNECKE SIBETH DABELSTEIN is extremely proud to be the German legal advisers to Baden-Württemberg company ACI Systems Alemania GmbH (ACISA) in its recent major deal with the Bolivian state company Yacimientos de Litio Bolivianos (YLB) for the extraction and processing of lithium deposits below Bolivia’s Uyuni salt flats (believed to be the largest lithium reserves in the world).

As you probably heard, the project, planned with a 70-year timeline, was signed by the two companies in Berlin on 12 December 2018 in the presence of the Minister for Foreign Affairs of the Plurinational State of Bolivia, Diego Pary Rodríguez, and Germany’s Federal Minister of Economic Affairs and Energy, Peter Altmaier. It will secure the supply to Germany of lithium-hydroxide, a crucial component in the production of lithium-ion batteries for electric vehicles.

Our law firm has long established experience and a leading reputation in advising on large and complex cross-border cooperation projects.

As our firm’s Commercial/IP/IT practice group, we were therefore uniquely placed to bring our expertise to this fascinating deal. The project, between a foreign state-owned enterprise and a German company embarking together on a major new extraction and industrialisation initiative, demanded our expert advice on a broad range of legal issues, including distribution, protection of intellectual property and industrial know-how as well as the core financing and contractual aspects of the deal, all areas in which our firm offers expertise.

Our international network of and long cooperation with other leading law firms worldwide also helped our contribution to the project, in this case through our work with the lawyers of leading Bolivian law firm MORENO BALDIVIESO, whom we have known for many years.

Why is this a good deal for all involved?

The deal in our view offers exceptional advantages to all parties.

Our client, ACISA, are experts in the production and processing of batteries and other lithium-related products and brings this know-how to its fellow contracting party YLB and the broader Bolivian state.

Second, ACISA have long experience in securing environmentally sound and safe practices for such large-scale projects and are committed to these fundamental principles for the extraction and production activities envisaged.

Third, the project brings new skilled employment opportunities to YLB and the broader Bolivian economy. Local employees will be trained, and the long timeline of the project promises an enduring and additional prosperity for Bolivia and its economic actors as a whole.

For our client and its investors, the project is of course also a great opportunity to apply its extensive knowledge in the field of lithium processing and in the production of batteries in general.

Finally, it offers Germany and Europe a large secure alternative source of this essential element, for which currently some 88% of global supply is in the hands of exclusively Asian producers. The continuing development and growth of the European electric vehicle market alone is highly dependent on securing that supply and sustaining healthy competition in the world market.

What challenges often arise in joint ventures? How did you navigate them?

Of course, there are always differing interests within such a large project, but we and our Bolivian counterparts were rigorous in developing a sound, equitable and transparent decision-making process. This was essential.

We took extreme care to ensure that neither party became “over-privileged” in the deal, irrespective of the formalities arising from their mutual contractual obligations.

We were also careful to make sure that the negotiations and our joint support to the day-to-day business of building the deal were efficiently and respectfully handled. We were dealing with different time zones, different languages and cultures, different working methods and the different organisational and regulatory constraints governing the responsible parties. All this fundamental context was managed with a great deal of personal care and mutual respect by all sides involved.

Can you share ways in which this venture will have a positive impact outside the corporate sphere?

Our client ACISA with YLB have pledged to jointly invest between €300 million and €400 million for the project’s initial stages, delivering between 30,000 and 40,000 tons of lithium-hydroxide per year by 2022. This is estimated to be enough to supply lithium-ion batteries to some 800,000 electric cars annually. Some 85% of the project’s production will be delivered to Germany.

This new supply in the world market will we believe bring broader and significant benefits as already mentioned above. There is currently a global oligopoly in the market of lithium production.  The market leaders are Asian companies who currently account for some 88% of global production of lithium-ion batteries. It is therefore certainly in the broader interests of Bolivia, Germany and the European Union as a whole that the participation of their respective local companies in this market creates more competition and a more broadly secured and sourced worldwide supply of lithium-hydroxide.

The project also helps secure the availability of this essential element for the development of the mechanically more efficient lithium-ion battery for electric vehicles and the latter’s perceived environmental and wider socio-economic benefits.

Finally, and perhaps most encouragingly, we believe this project will also have a positive effect on the economic development of Bolivia and relations between Germany, the broader European Union and Bolivia in general.

The prospect of these broader benefits was also remarked upon and celebrated at the joint venture’s signing ceremony in Berlin on 12 December 2018.

How is the M&A sphere looking for your jurisdiction in 2019 so far?

As already mentioned, at ARNECKE SIBETH DABELSTEIN we deal with a significant number of national and international M&A projects and expect this volume to be sustained in 2019 as well. New technologies will continue to be a major driver of global takeovers. The area of Legal Tech, an important capability and sectoral focus of our firm, will certainly gain in importance. Also, succession issues in medium-sized (Mittelstand) companies, many of whom are among our clients, will certainly continue to keep us busy in 2019.