Event Background: in October 2021, the Chilean government announced that it would provide five 80000 ton quotas and 400000 ton exploration and production contracts to domestic and overseas companies. The successful bidder would receive 7 years of exploration and development projects and 20 years of production time.
Event overview: on January 12, the Chilean Ministry of mining awarded two of the five lithium mining contracts to Byd Company Limited(002594) Chile Company (bydchilespa) and northern mining service operation company (serviciosyoperaciones minerals del nortesa). Each contract was awarded 80000 tons of lithium production quota. The two enterprises quoted us $61 million and US $60 million respectively in the bidding. Other participants include Yabao company (bid us $60 million), sqm (bid us $60 million), etc. The successful bidder must obtain all necessary permits before the exploration and production phase begins.
Lithium resources have become the bottleneck of downstream production and expansion, which is of strategic significance. Lithium resources of Byd Company Limited(002594)
The layout also includes Byd Company Limited(002594) 30000 T / a salt lake lithium extraction project of the joint venture with Qinghai Salt Lake Industry Co.Ltd(000792) , 18% equity participation in Zabuye lithium industry, deep binding Youngy Co.Ltd(002192) etc. However, the salt lake Byd Company Limited(002594) project is still in the pilot demonstration stage, and the expansion of Zabuye Salt Lake still takes time. At present, the expansion of Youngy Co.Ltd(002192) is still at a standstill, and the guarantee of lithium resources will become Byd Company Limited(002594) Even one of the most important bottlenecks of OEMs this year, the importance of lithium resources is prominent.
The transformation of global lithium procurement mode is irreversible, and downstream OEMs will directly lock in upstream resources. In electric
In the wave of industrialization and transformation, we believe that in the future, the cases that downstream battery and terminal vehicle enterprises directly lock in upstream lithium resources will be more common. We believe that the ultimate bottleneck restricting the manufacturing industry lies in the upstream resources. The layout of upstream resources by the downstream conforms to the industrial profit distribution logic of the smile curve, and the upstream lithium resource enterprises should receive a premium at the resource end.
The competition for lithium resources is white hot, the marginal of global circulating lithium resources is tightened, or it indicates that the price of lithium will remain high in the future. According to our statistics, although the absolute amount of lithium concentrate circulating in the spot market will increase in the future, the proportion will tighten marginally. According to our statistics, the proportion of global lithium resources not locked by underwriting in 2021 is about 18%, mainly from Qinghai Salt Lake, Pilbara and Galaxy resources in Western Australia and some loose orders in South America salt lake. We expect that the proportion of global lithium resources not locked will drop to 11% by 2024. The current lithium price is determined by the marginal spot market. We believe that the marginal tightening of the retail market may indicate that the lithium salt price will remain high for a long time in the future.
Investment suggestion: under the current lithium price, the valuation cost performance of the sector is prominent, grasp the two main lines of high resource self-sufficiency rate and high performance, and meet the opportunity of long-term premium of lithium price. The sector has entered the performance forecast time window. Under the current lithium salt price assumption, the annualized PE of the sector will generally callback to less than 20 times. We suggest paying attention to the targets with high resource self-sufficiency rate + high performance fulfillment, recommending Qinghai Salt Lake Industry Co.Ltd(000792) , and paying attention to Yongxing Special Materials Technology Co.Ltd(002756) , Tibet Mineral Development Co.Ltd(000762) , Tianqi Lithium Corporation(002466) and Ganfeng Lithium Co.Ltd(002460) .
Risk tips: the sales volume of electric vehicles is less than expected, the expansion of the project is less than expected, global macroeconomic risks, etc.
