Ningde era 32 billion yuan! Layout of battery upstream material projects

On October 12, CATL announced that the company intends to invest in the construction of the Bangpu Integrated Battery Material Industrial Park project in the Tianjiahe area of Yaojiagang Chemical Park, Yichang City, Hubei Province by its holding subsidiary Guangdong Bangpu and its holding subsidiaries. The total investment amount does not exceed 32 billion yuan.

This project is mainly to build an intensive and large-scale production base with waste battery material recycling, Lithium iron phosphate and ternary precursors, lithium iron phosphate, lithium cobalt oxide and ternary cathode materials, graphite, Phosphoric Acid, etc. It is planned to be popularized by Guangdong Bang Its holding subsidiary is responsible for the implementation. Among them, the construction of raw materials such as phosphoric acid and sulfuric acid in the integrated battery material supporting chemical materials is planned to be constructed in cooperation with Hubei Yihua Chemical Co., Ltd. (hereinafter referred to as "Hubei Yihua").

It is worth noting that Guangdong Bangpu, the company responsible for this project, is mainly engaged in the research and development of resource recycling technology, and the recycling of waste power batteries for new energy vehicles.

Ningde Times also stated that the implementation of this project is conducive to ensuring the company's battery material supply and advancing the company's goal of full life cycle management of decommissioned power batteries. This may mean that the company's investment is focused on the recycling of waste battery materials.

The Ningde era favors the recycling of used battery materials because of the large room for development in this industry. In the fierce industry competition, the Ningde era needs to seize market share.

According to data from the China Automotive Technology Research Center, my country’s total power battery retirements in 2020 are about 200,000 tons, and it is expected that the retirements in 2025 will reach 780,000 tons. Moreover, according to Orient Securities' calculations, the size of the battery recycling market brought by such a large amount of power battery retirement will reach 37 billion yuan.

On the other hand, in recent years, the state has successively introduced relevant policies to support the development of the power battery recycling business. For example, in January this year, the Minister of Industry and Information Technology Xiao Yaqing said that he will promote the recycling and utilization of new energy vehicle power batteries by formulating supporting laws and regulations, improving the recycling system, and issuing relevant standards.

The Ministry of Industry and Information Technology also released two batches of companies in 2018 and 2021 that meet the "Industry Standards and Conditions for the Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles", a total of 27 companies.

In August of this year, the Ministry of Industry and Information Technology and other five departments jointly issued the "Administrative Measures for the Echelon Utilization of Power Batteries for New Energy Vehicles." The "Measures" proposes to encourage tiered utilization companies to cooperate with enterprises in the production of new energy vehicles, power battery production, and recycling and dismantling of scrapped motor vehicles, strengthen information sharing, use existing recycling channels, and efficiently recycle used power batteries for tiered utilization. Encourage power battery manufacturers to participate in the recycling and cascading use of waste power batteries.

In this context, upstream and downstream companies in the new energy automobile industry chain are accelerating the deployment of battery recycling business. For example, GEM stated that power battery recycling is the next revenue outlet for the new energy industry; on September 9 this year, Tianqi Co., Ltd. joined hands with FAW to jointly build Power battery recycling network; On September 16 this year, Chaoyue Technology, which was listed less than two months ago, plans to invest 400 million yuan in a waste lithium battery recycling project.

However, it is worth noting that currently only 27 companies are "regular" enterprises in the battery recycling industry. Under the growing environment of decommissioned power batteries, the power battery recycling industry still has great difficulties.

Since December last year, CATL has announced six battery expansion projects with an investment of more than 73.5 billion yuan. CATL currently has eight battery production bases located in Ningde, Fujian, Liyang, Jiangsu, Xining, Qinghai, Yibin, Sichuan, Zhaoqing, Guangdong, Erfurt, Germany, Shanghai, and Yichun, Jiangxi.

According to the latest data disclosed in the semi-annual report, as of the end of June 2021, CATL’s battery production capacity was 65.45 GWh, and the capacity under construction reached 92.5 GWh. CATL did not clearly disclose its long-term production capacity planning goals. However, according to research reports by many brokerage firms, the Ningde era's production capacity planning target by 2025 is close to 600 GWh.

CATL announced in August this year that it intends to raise funds of no more than 58.2 billion yuan through the issuance of stocks to specific targets. The funds will be mainly used for the construction of lithium battery production bases.

In the context of large-scale expansion of battery production capacity, CATL has made several moves this year to strengthen the layout of upstream materials for lithium batteries.

At the end of September this year, CATL announced the acquisition of the entire equity of Millennial Lithium Corp (hereinafter referred to as Millennial), a Canadian lithium mine producer, for 377 million Canadian dollars (approximately 1.92 billion yuan).

Millennial is engaged in the acquisition, exploration and development of lithium mines. The company's main assets are the Pastos Grandes lithium salt lake project in Salta Province, Argentina, and the Cauchari East lithium salt lake project in Jujuy Province, Argentina. The products will be mainly used to produce lithium battery cathode materials. However, the above-mentioned lithium salt lake project has yet to be developed or explored, and has not yet been put into actual operation.

While acquiring Millennial, a Canadian lithium mine producer, CATL also acquired a part of the shares of Manono, an African lithium mine project, through a shareholding company.

Australian mining company AVZ announced on September 27 that it will sell a 24% stake in the Manono lithium mine project to Suzhou Tianhua Times New Energy Industry Investment Company (hereinafter referred to as Tianhua Times) for US$240 million (approximately RMB 1.55 billion) ). AVZ currently owns a 75% stake in the Manono lithium mine project.

Tianhua Times was established in August this year with a registered capital of 1.6 billion yuan. The shareholders include Ningde Times and a company under the name of Pei Zhenhua, but their shareholding ratios have not been disclosed. Pei Zhenhua is the chairman of Tianhua Super Clean (300390.SZ).

In April this year, CATL also reached an all-round strategic cooperation with Luoyang Molybdenum (603993.SH) in the field of new energy metal resources. The cooperation period is ten years. The two companies will jointly develop Kisanfu, a Copper-cobalt mine in the Congo (DRC), which contains more than 6.2 million tons of copper metal and more than 3.1 million tons of cobalt metal, which is one of the world's highest grade copper-cobalt mines to be developed.

In December last year, when Zeng Yuqun participated in the annual meeting of high-tech lithium battery & electric vehicles, he said that the lithium battery industry will enter the TWh era by 2025, but the demand for upstream raw materials such as ternary materials and lithium iron phosphate in 2025 is actually effective. There is a big difference in production capacity.