At the beginning of 2022, lithium battery related enterprises accelerated the layout of upstream resources. On January 13, it was reported that Chile gave two of the five lithium mining contracts to Byd Company Limited(002594) Chilean company and a local company. Byd Company Limited(002594) bid us $61 million and was granted a quota of 80000 tons of lithium production. Byd Company Limited(002594) confirmed the news to the reporter of Securities Daily.
It is not only Byd Company Limited(002594) that aims at lithium resources. On January 12, Eve Energy Co.Ltd(300014) announced that it had obtained 35.29% equity of Xinghua lithium salt by bidding for 144 million yuan, and transferred 13.71% equity of Xinghua lithium salt by 56.0158 million yuan. In total, it would directly hold 49% equity of Xinghua lithium salt.
In this regard, Bai Wenxi, chief economist of IPG China, said in an interview with the Securities Daily that the great development of the new energy industry has promoted the rapidly rising demand for lithium resources. Mastering lithium resources has become a strategic necessity for lithium battery enterprises, and accelerating the layout of upstream resources by lithium battery related enterprises such as Byd Company Limited(002594) , Eve Energy Co.Ltd(300014) is also an embodiment of this strategy.
Byd Company Limited(002594) winning the lithium mine contract
was granted 80000 tons of lithium production quota
According to public data, in October 2021, Chile announced that it would provide five quotas of 80000 tons of lithium exploration and production contracts to domestic and overseas companies, totaling 400000 tons. The successful bidder will receive 7 years of exploration and development projects and 20 years of production time.
On January 12, 2022, the official website of the Ministry of Mines of Chile announced that it chose to deliver two of the five quotas provided to Byd Company Limited(002594) Chile and another local company. Both companies obtained 80000 tons of lithium production quota, of which Byd Company Limited(002594) Chile Company offered us $61 million. The announcement said that these two quotations were much higher than other quotations received, and the total quota granted was 160000 tons of lithium, accounting for about 1.8% of Chile’s known lithium reserves.
Bai Wenxi said, Byd Company Limited(002594) as a global benchmark enterprise in lithium battery production, the demand for lithium resources is self-evident. Winning the bid for Chilean lithium mine can strengthen the control of upstream resources and strengthen its supply chain. For its automobile business, in addition to effectively controlling costs, it can also improve the stability and security of the industrial chain.
Qi Haizhen, President of Beijing Teyi sunshine new energy, analyzed the reporter of Securities Daily and believed that the price is not so important from the long-term development of the industry and the company as long as the cost of purchasing lithium ore does not exceed the normal operation range.
From the perspective of several major businesses of Byd Company Limited(002594) , lithium resources are inseparable from new energy vehicles, intelligent product development, production and assembly, secondary rechargeable batteries, etc. In fact, Byd Company Limited(002594) who was born in battery industry realized the importance of upstream supply chain layout earlier than traditional car enterprises.
In 2010, Byd Company Limited(002594) participated in Zabuye Salt Lake, China’s largest salt lake lithium mine, invested 18% of Tibet Zabuye lithium industry, and made a certain strategic reserve in upstream raw materials. In 2017, Byd Company Limited(002594) announced that it had broken through the technology of lithium extraction from Salt Lake, and based on this, it had jointly developed lithium resources in Qinghai Salt Lake with Qinghai Salt Lake Industry Co.Ltd(000792) , and planned to build a 30000 ton lithium carbonate project. The follow-up progress was stalled due to the suspension of listing of Qinghai Salt Lake Industry Co.Ltd(000792) .
Some analysts believe that Byd Company Limited(002594) winning the bid for Chilean lithium is conducive to the company’s full protection of upstream resources and ultimately to the realization of its strategic goal of new energy industry.
“After winning the bid for Chilean lithium mine, Byd Company Limited(002594) taking new energy vehicle products as the core driving force, the strategic development plan of creating the full layout of the vertical industrial chain integration of \’lithium mine – three batteries (battery, motor and electronic control) – automobile\’ is gradually taking shape.” Qi said.
prices keep rising
lithium battery enterprises rush to grab “lithium”
It is not only Byd Company Limited(002594) that marches into upstream resources. On January 12, Eve Energy Co.Ltd(300014) announced that the company acquired about 35.29% of the equity of Xinghua lithium salt at a bidding price of 144 million yuan, and transferred 13.71% of the equity of Xinghua lithium salt at a price of 56.158 million yuan. In total, the company acquired 49% of the equity of Xinghua lithium salt at a price of about 200 million yuan.
According to public reports, the total investment of the project with an annual output of 10000 tons of high-purity lithium chloride and 25000 tons of boric acid implemented by Xinghua lithium salt is about 647 million yuan. It is listed as a key project in Qinghai Province and has made a certain breakthrough in lithium extraction from salt lakes.
Eve Energy Co.Ltd(300014) said that holding 49% equity of Xinghua lithium salt is conducive to the company’s further focus on the main business of lithium battery, which is of positive significance to the company’s development of upstream industrial chain and optimization of industrial layout; Cooperation with Sunresin New Materials Co.Ltd Xi’An(300487) is conducive to its in-depth cooperation and layout in the lithium resources industry chain, which is of positive significance for the company to continuously improve its own industrial chain layout.
In addition to Byd Company Limited(002594) , Eve Energy Co.Ltd(300014) , Contemporary Amperex Technology Co.Limited(300750) , LG and other enterprises have also joined the team of lithium grabbing. It is reported that Contemporary Amperex Technology Co.Limited(300750) took a stake in Manono, the world’s largest lithium mine, on September 27, 2021, and launched fierce competition with Ganfeng Lithium Co.Ltd(002460) for the acquisition of Millennium lithium industry in Canada. In January 2022, LG energy signed a binding off purchase agreement with liontown Resources Ltd, an Australian lithium miner.
In Qi Haiyu’s opinion, with the increasing demand for lithium batteries in the new energy vehicle industry, the safe and stable supply of lithium ore, lithium salt and other upstream products has become the key or even bottleneck of the industry’s development. With the rising prices of various raw and auxiliary materials, buying and locking mines has become the most survival safe operation.
In recent years, with the rapid growth of the output of new energy vehicles, the demand for power batteries is also expanding, and the price of upstream lithium materials is also rising. According to the data of Baichuan Yingfu, as of January 13, 2022, the price of China spodumene mining association was $2630 / T to $2680 / T.
In terms of lithium salt, take lithium carbonate as an example. As of January 13, the price of industrial lithium carbonate rose to 302500 yuan / ton, up 11.83% from last week, 42.35% from last month and 17.48% from the beginning of the year; The price of battery grade lithium carbonate rose to 327400 yuan / ton, up 11.59% from last week, 46.87% from last month and 15.93% from the beginning of the year.
Qi Haizhen said that companies such as Byd Company Limited(002594) , Eve Energy Co.Ltd(300014) strategically extend the industrial chain and lock in links such as lithium ore mining or lithium salt production and processing, which can further stabilize their respective development status and ensure the stability of the industrial chain, improve their anti risk ability and obtain more benefits.
