Chinese waste disposal company Weiming Environment announced on August 4 that it will be teaming up with Yongqing Technology, Chengtun Mining, and Sunwoda to develop a project for manufacturing advanced materials used in Li-ion batteries. Specifically, they will be building up new production capacity for high-grade nickel matte, ternary precursors with high nickel content, cathode materials with high nickel content, and other related products. The capacity target is 200,000 tons per year for ternary cathode materials with high nickel content. The total investment in the project is capped at CNY 19.1 billion. The location of the project is set in Wenzhou, a major city in China’s Zhejiang Province.
Established in 2001, Weiming has been focusing on the disposal of solid wastes. However, the company is now expanding into the market for the upstream materials used in the production of Li-ion batteries (e.g., high-grade nickel matte). Weiming touts that it has the capability to develop the equipment and manufacturing process in-house. Moreover, it has access to stable financing channels.
Market intelligence firm TrendForce points out that Weiming, Chengtun, and Yongqing already established a joint venture earlier this year. On April 4, the three companies signed an agreement to develop the aforementioned Wenzhou project. Their joint venture was formally established on May 23 and named “Zhejiang Weiming Shengqing Energy Materials Co. Ltd.” Then in June, Tsingshan Holding Group transferred its 19% stake in Weiming Shengqing to Yongqing. Tsinghan is Yongqing’s parent company. Following the transfer, the shareholding structure of the joint venture is now as follow: Weiming has 51%, Chengtun has 30%, and Yongqing has 19%. In the latest move, Sunwoda has come onboard for the Wenzhou project.
Weiming’s announcement disclosed that the joint venture will be responsible for the construction phase of the project. The total investment in the project is currently estimated around CNY 11.5 billion. Weiming’s own investment is capped at CNY 3.45 billion. Once the project is completed and enters operation, it will need around 7.6 billion in working capital.
Weiming said Sunwoda as the new partner for this project will be able to provide the critical resources from both the upstream and downstream sections of the new energy supply chain. Also, Sunwoda like the other partners will have a stake in the joint venture. Based on the new arrangement, Sunwoda will obtain a 10% stake in Weiming Shengqing, while Weiming, Yongqing, and Chengtun will control 60%, 20%, and 10% respectively.
Weiming believes that with the support from the three partners, it will gain more opportunities to work with other companies that are involved in the market for new and advanced battery materials. Additionally, Weiming will improve its capabilities with respect to technological innovations, development of new manufacturing processes, and market share expansion. All in all, Weiming will be able to further grow its businesses and revenue.
On the other hand, Weiming in its announcement admitted that the joint venture represents its first step into the market for battery materials, and there will certainly be challenges ahead. The foremost challenge relates to controlling the costs of the critical metals (e.g., nickel, lithium, and cobalt) and the manufacturing processes. Getting customers to accept its products and procure a sizable quantity also presents risks in the aspects of market, technical expertise, and management. Additionally, setting up new production lines will involve overcoming barriers associated with capital, talents, and technologies.
Weiming emphasized that it has fully committed to the manufacturing of high-grade nickel matte and possesses the necessary equipment and in-house expertise. At the same time, it has access to stable financing channels. With partners that can provide support in terms of the critical metals, equipment, and other production-related resources, Weiming anticipates that it will be able to effectively minimize any kinds of risks as it proceeds with the Wenzhou project. The project is currently in the planning phase, and completing the environment impact assessment and obtaining the necessary permits is required before advancing to the construction phase. Weiming estimates that the entire development process will take about two and a half years.
It is also worth mentioning that Weiming announced another foreign manufacturing project on the same day that Sunwoda was formally brought into the development of the Wenzhou project. This foreign project is located in the Weda Bay Industrial Park in Indonesia and involves nickel ore refining and high-grade nickel matter production. In this other announcement, Weiming said its wholly-owned subsidiary Weiming (Hong Kong) has signed an agreement with Merit and Xinwei Electronic to form a joint venture named “JiaMan New Energy Indonesia PT” with an authorized capital set at USD 1 million.
The shareholding structure of JiaMan is arranged as follow: Weiming will have a 60% stake, Merit will have 30%, and Xinwei will have 10%. Regarding the amount that will be invested into the Weda Bay project, Weiming will commit no more than USD 71 million (CNY 480 million). As for the planned production capacity, the Weda Bay project is set to attain 400,000 tons per year for high-grade nickel matte and related nickel products.
Weiming said teaming up with Merit and Xinwei in the fields of new energy technologies and advanced materials fits into its own long-term growth strategy. By expanding its business related to materials used in new energy applications, Weiming will be able to establish itself as a global leader in environment-protection solutions.
This article is a translation of a Chinese article posted by Martin at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.