Under the steady growth and double carbon policy, we continue to be optimistic about the upward profit of electrolytic aluminum
Event: on March 5, the fifth session of the 13th National People’s Congress was held. According to the government work report of the State Council, (1) macro aspect: the GDP growth target in 2022 is set at about 5.5%, and the orientation of “steady growth” is clear. “About 5.5%” is the target of “medium and high growth rate” in the 14th five year plan. From 2019 to 2021, the compound growth rate of GDP was 5.1%, and that of 21q4 was 5.2% year-on-year, ”The 5.5% target “shows that the government attaches importance to creating a good environment for stable and orderly economic development in 2022 and boosts market sentiment. (2) non ferrous metal industry policy: relax the dual control policy of energy consumption and promote double carbon work in an orderly manner. The report puts forward that, “The energy consumption intensity target shall be comprehensively assessed during the 14th Five Year Plan period, with appropriate flexibility. The new renewable energy and raw material energy consumption shall not be included in the total energy consumption control”. At the same time, it is required to orderly promote the work of reaching the peak of carbon, and promote the transformation from “dual control” of energy consumption to “dual control” of total carbon emission and intensity.
Comments: continue to be optimistic about the upward profit of electrolytic aluminum.
Electrolytic aluminum is a high energy consumption variety. According to SMM, the power consumption per ton of electrolytic aluminum is 13500kw / h, which is the main carbon emission source of electrolytic aluminum industry chain. Compared with the “one size fits all” production reduction of the industry in 2021, the relaxation of the “energy consumption control” policy this year is conducive to the large-scale production of electrolytic aluminum industry. At present, the internal and external differentiation of global electrolytic aluminum is serious, and the gap between supply and demand still shows the trend of accelerated expansion. Overseas, the fermentation of the conflict between Ukraine and Russia has led to a sharp rise in energy prices, a large number of aluminum plants in Europe have reduced production and stopped production, which is difficult to recover in the short term, resulting in the maintenance of high aluminum prices; The resumption of electrolytic aluminum production in China has accelerated, but the output in the first quarter is difficult to exceed the level of the same period last year. Combined with the recent production reduction in Guangxi and Shanxi and the resumption of production in other regions, according to SMM calculation, it is expected that China’s electrolytic aluminum will resume production and newly put into production by nearly 2 million tons at the end of the first quarter, and China’s electrolytic aluminum operation capacity will rise to around 39.6 million tons. According to CISC, there are still about 700000 electrolytic aluminum production capacity to be resumed in the second quarter, and the supply is slowly released to offset the impact of the reduction in imports caused by the closure of the import window. The supply and demand side of electrolytic aluminum is still tight. Electrolytic aluminum prices may remain high. We believe that the profits of China’s electrolytic aluminum industry may continue to rise in the future.
Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) plans to underwrite GL1 lithium concentrate, which will help open up the space for long-term growth
Event: on March 3, according to the announcement of ASX, global lithium (ASX: GL1) and Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) signed a 10-year spodumene concentrate underwriting agreement. According to the terms of the agreement, Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) will underwrite no less than 30% of the products produced by GL1. Meanwhile, Suzhou Ta&A Ultra Clean Technology Co.Ltd(300390) will have the opportunity to increase the number of products based on the agreed 30%, with a maximum increase of 15% in each contract year. The pricing will be determined according to the market price of spodumene concentrate.
Termination clause: either party may terminate the agreement if the following circumstances do not occur on or before December 31, 2024 (or other date that may be agreed by both parties):
(1) GL1 completes the construction and commissioning of spodumene concentrate plant;
(2) GL1 completes the internal product identification and meets the agreed product standards.
Transaction history review: according to GL1 announcement, in December 2021, Tianyi lithium acquired 9.9% shares of GL1 for a $6.2 million, becoming the first largest shareholder of global lithium.
At present, GL1 has interests in two mines:
\u3000\u30001. 80% interest in manna lithium project. According to the announcement of gl12021 in December, the company used US $33 million to acquire 80% equity of manna lithium project under BRB, including exploration rights and future mining rights for lithium and associated minerals. The lithium ore is mainly spodumene and lepidolite pegmatite, which is located about 100km east of Kalgoorlie in Western Australia. Preliminary drilling shows high-grade lithium mineralization (the average grade of Li2O is about 1.14%), and a large number of exploration and drilling projects are planned to be carried out in 2022.
\u3000\u30002. 100% interest in marblebar lithium project (MBLP). The lithium mine is located in Pilbara, Greater Asia, Western Australia. The company conducts preliminary exploration in its Archer deposit. According to the GL1 official website, the resource is 10.5 million tons, and the average grade of Li2O is about 1%, which is converted into about 260000 tons of LCE. At present, according to GL1 announcement, the company plans to invest funds in the infill drilling and edge exploration drilling plan of archer deposit. At the same time, in November last year, the company raised a $13.6 million for the project and obtained the investment of Tianyi lithium.
Comments: lithium resources may be tight for a long time, and the upstream and downstream of the industrial chain will accelerate the layout of lithium mines. According to the announcement of SMM and companies, we have counted 15 resource side layout cases since the beginning of 2022. The layout of the resource side or the supply of raw materials by relevant enterprises will help open up the long-term growth space of enterprises.
Risk tips: demand is lower than expected, supply release is higher than expected, macroeconomic performance is poor, etc
