Lopal replaces Yongxing Material in the lithium carbonate joint venture project with CATL

Lopal will cooperate with CATL on lithium carbonate joint venture project

On the evening of September 5, 2022, Yongxing Material announced the termination of the joint venture agreement with CATL. On September 7, CATL said that the cancellation of cooperation with Yongxing Material would not affect the company’s lithium mine development progress. The development progress of the company’s lithium bearing porcelain clay ore depends on the front-end processes such as mining rather than the back-end lithium carbonate smelting capacity.

The company has obtained the exploration right and mining right successively, and the business is progressing smoothly. Moreover, the company has several lithium carbonate smelting capacity partners, so the development progress of the lithium ore will not be affected by the change of this matter. On the same day, Lopal announced that it would cooperate with CATL in the lithium carbonate joint venture project.

The development of Lopal in lithium battery industry

Founded in 2003, Lopal mainly deals in fine chemicals. Its industries cover many fields, such as lubricating oil and grease, environmental protection urea for vehicles, vehicle maintenance products, intelligent equipment, hydrogen energy, lithium battery materials, etc., with a total of 11 product series.

Among them, the lithium battery materials business is Lopal’s industrial expansion, which officially entered in 2020 and rapidly launched its strategic layout. There are a great number of manufacturers do well in the field of lithium energy storage battery, which can be shown in top 10 lithium energy storage battery manufacturers in China in 2022.

Initially, Lopal announced its entry with the lithium battery material investment project, and then acquired the related assets and businesses of lithium iron phosphate under BTR. In March 2021, together with Great Power and other enterprises, Yingda lithium battery was established.

Since then, Lopal has continued to make efforts to lay out lithium battery materials through the acquisition of high-quality assets, foreign investment and fixed value-added capital raising.

Until the middle of October 2021, Changzhou lithium source in China officially obtained CATL investment, accounting for 11% of the shares. On the basis of equity cooperation, Changzhou lithium source further provided CATL with lithium iron phosphate cathode material business at the agreed price and quantity, becoming one of CATL’s core suppliers.

Although it has been in the field of lithium battery materials for less than two years, Lopal’s performance in 2021 has greatly increased. During the period, the company achieved a revenue of 4.054 billion RMB, a year-on-year increase of 111.72%, and the highest revenue since its listing. The net profit was 351 million RMB, an increase of 72.98% year-on-year. Lopal’s profit mainly comes from the growth of lithium iron phosphate material business.

It is worth noting that TangShan XinFeng Spodumene Mining is a supplier of Lopal lithium carbonate. It now has a capacity of 10000 tons of lithium carbonate and 10000 tons of lithium hydroxide. In May this year, TangShan XinFeng Spodumene Mining and Lopal jointly invested RMB 900 million to develop and construct the lithium hydroxide / lithium carbonate project with an annual output of 30000 tons.

The lithium resources of CATL

In the context of the explosion of demand for new energy vehicles, the contradiction between supply and demand of lithium resources is acute, and power battery manufacturers led by CATL pay more attention to the control and layout of upstream resources.

Lithium ion battery is a kind of rechargeable batteries. Since 2018, CATL has gradually improved its control over upstream raw materials such as lithium resources. In March 2018, CATL invested more than 50 million RMB in North American lithium industry, holding 43.59%;

In September 2019, it invested 55 million AUD in Pilbara, holding 8.5%. In 2020, Tianyi Lithium Industry, in which CATL holds 25% equity, signed a five-year supply agreement with Pilbara, which will supply 75000 tons of spodumene concentrate to Tianyi Lithium Industry every year.

In 2021, CATL stepped up efforts to improve the layout of lithium resources. On September 27, 2021, CANMAX announced that CATH planned to jointly develop the Manono project with AVZ, and CATH acquired 24% equity of the Manono project with us 240 million $(about 1.552 billion RMB). Manono lithium mine is located in the Democratic Republic of the Congo (DRC). It is one of the hard rock lithium deposits with the largest reserves and the highest grade.

It is estimated that the reserves of lithium resources are 400 million tons, and the grade of lithium oxide is 1.65%, which is equivalent to 3.63 million tons of LCE. The designed capacity of Manono project includes an annual output of 700000 tons of lithium oxide, which is expected to be completed and put into operation in 2023. Through its overseas investment in CANMAX, CATL has locked in the supply of lithium concentrate to a certain extent.

According to the data, through the signing of the agreement between the parties, CANMAX has obtained the annual supply guarantee of 380000-47000 tons of spodumene concentrate, and it is preliminarily estimated that it can guarantee the production capacity of about 60000-70000 tons of lithium hydroxide.

In 2022, CATL will turn its eyes to lepidolite. In April, Yichun Shidai successfully won the exploration right of ceramic soil (containing lithium) in zhenkouli Fengxin jianxiawo mining area, Yifeng County, Jiangxi Province, China with an offer of 865 million RMB.

The information shows that the production scale of this mining area may reach 200000 tons of lithium carbonate per year, and its lithium resources are more than twice that of Yichun 414 mining area, which is regarded as the best lithium resource target in Jiangxi Province in China.

According to the plan, Jianxiawo mining area plans to produce 33 million tons of lepidolite beneficiation and supporting projects annually. At present, CATL has obtained the first phase of exploration and mining rights.

In addition, Yichun Shidai also plans to build an annual output of 80 million tons of lithium bearing porcelain clay mineral processing project and an annual output of 200000 tons of battery grade lithium carbonate project in Yifeng county and Fengxin County.

Conclusion

CATL accelerated the layout and improved the layout of lithium resources, reflecting the urgent mentality of power battery enterprises to control upstream resources.

Due to the production expansion plan of the lithium battery end, the tight supply of raw materials and the price rise, currently global power battery companies are accelerating the storage of upstream raw materials to reduce the impact of supply chain price fluctuations and achieve deep control of upstream resources in the longer term.