Hard-rock lithium exploration company Patriot Battery Metals (ASX: PMT) has received a significant boost to its international ambitions with global motoring powerhouse Volkswagen agreeing to take a strategic stake in the company.

Volkswagen Finance Luxembourg will invest approximately $77 million to acquire 9.9% of Patriot’s issued and outstanding common shares.

The two companies have also signed a binding offtake agreement for the supply of 100,000 tonnes of spodumene concentrate per year to Volkswagen integrated battery manufacturing subsidiary PowerCo over a 10-year term.

Long-term partner

Patriot chief executive officer Ken Brinsden said that bringing in a long-term strategic partner who is already a major participant in the European and North American battery supply chains was a pivotal milestone for the company.

“This investment is consistent with our long-term strategy for Patriot to become a global lithium leader and a key supplier of lithium raw materials.”

“The initial investment by PowerCo and Volkswagen validates the world-class nature of the Shaakichiuwaanaan project and the offtake cements the company’s future as a major lithium raw materials supplier of choice in their electric vehicle (EV) supply chain.”

Leading EV developer

Volkswagen is currently the largest European manufacturer of EVs, with substantial strategic and financial commitments to the EV industry in North America.

Volkswagen Group board member for technology Thomas Schmall said Patriot’s spodumene would supply PowerCo’s cell production activities in Europe and North America including its battery cell factory in St. Thomas, Canada.

PowerCo aims to make St. Thomas its largest cell factory, with a production capacity of up to 90 gigawatt-hours—enough to produce more than 1 million EVs a year.

“By collaborating with Patriot Battery Metals, we are not only securing key raw materials for cutting-edge sustainable battery technology but also reinforcing our commitment to North America,” he said.

“Together with partners, we are building a dedicated e-mobility ecosystem in North America, ranging from battery technology to software and specific vehicle architectures.”

De-risking strategy

Patriot reported earlier this month that it had successfully manufactured a battery-grade lithium hydroxide product from its cornerstone CV5 spodumene pegmatite project in Canada.

Mr Brinsden said the success vindicated the company’s belief in the importance of looking beyond and from the viewpoint of the end user of the downstream product.

“Not all spodumene concentrates are created equal, and by demonstrating that the high-quality, low-iron spodumene concentrate produced from CV5 results in a marketable and on-spec battery-grade lithium hydroxide product, we are further validating and de-risking the project as we eventually look to capitalise on this high-value downstream product category,” he said.