Mg-12wt.% Li matrix composite reinforced with T300 carbon fibres coated with pyrolytic carbon (similar to 100nm) was manufactured by the infiltration of the carbon fibre bundle with MgLi melt. The fibre/matrix chemistry was studied by means of in situ Auger electron spectroscopy of the fibre jacket and the fibre cross-fracture in ultra-high vacuum broken composite bars. The fibre bulk attack with lithium is concluded wherein C(KVV) lineshape indicates that lithium carbide is the only reaction product, and its distribution in the fibre bulk is quite uniform. Magnesium penetrates also the fibre bulk but its role in the fibre attack is marginal. It is assumed that lithium carbide is formed as a dispersed minor phase in the fibre bulk via decomposition of intermediate lithium intercalation products.