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Ganfeng Will Invest Another RMB 30 Billion in Yichun, Asia’s Lithium Capital

published: 2022-10-13 9:30

Major Chinese lithium supplier Ganfeng Lithium maintains an aggressive pace in its investment activities. On September 28, it disclosed that it has signed a new strategic cooperation agreement with the government of Yichun for the joint development of a project that encompasses lithium resources, Li-ion battery materials, new types of Li-ion batteries, and products for various energy storage applications. Ganfeng signed this agreement just after it had announced a capital injection of more than RMB 6 billion into GFL International and Jiangxi Lingneng Lithium Industry. Yichun is a city in China’s Jiangxi Province.

According to the reporting by local news media, the signing ceremony was held in Yichun Guest House on September 28. The event is a confirmation of Ganfeng’s intention to invest RMB 30 billion in an integrated manufacturing base in the Yichun Economic and Technological Development Zone. This new base is expected to be used to manufacture Li-ion batteries, battery materials, battery components, and other related products. According to Ganfeng’s notice about the agreement, the base will have a production capacity of 30GWh per year for new types of Li-ion batteries and a production capacity of 7,000 tons per year for lithium metal. In Fengxin, Ganfeng will set up 50,000 tons per year of production capacity for lithium ore mining and battery-grade lithium salt. In Fengcheng, Ganfeng will set up 50,000 tons per year of production capacity for lithium hydroxide. Fengxin and Fengcheng are under the administration of Yichun.

Also, under the agreement, Ganfeng Lithium and Yichung Mining will form a joint venture. The former will have a 65% stake in the joint venture, whereas the latter will have a 35% stake.

Additionally, the government of Yichun is expected to do its utmost in the provisioning of raw materials to Ganfeng. In accordance with the actual progress in the building of the base, the local government will auction off portions of ore resource that is within its jurisdiction. The joint venture will be able to bid and obtain the mining rights over these portions of ore resource.

In its notice, Ganfeng stated that the agreement will secure an abundant supply of lithium ores and thereby allow it to expand production for lithium salts and Li-ion batteries. Furthermore, the new base will contribute to the company’s efforts in vertical integration and supply chain development. All of these benefits will translate to enhanced core competitiveness and profitability. In sum, the agreement fits into the company’s long-term plan for supply chain formation and long-term growth.

Yichun Is Lithium Capital of Asia

According to the official website of the government of Yichun, the northwestern part of Jiangxi, where the city is located, is rich in precious metals such as lithium, tantalum, niobium, rubidium, and cesium. The area also contains the world’s largest reserve of lepidolite, accounting for more than 70% of the global total mining amount. Since many countries have established a timetable for electrifying all on-road vehicles and phasing out the production of vehicles powered by fossil fuels in the near future, Yichun’s lithium resource is of immense strategic importance and economic value.

At a recent press event, Yichun’s Party Secretary Yu Xiuming said the city is home to 159 companies that are involved in lithium-related businesses. Among them, 111 are above the designated size. Also, there are 133 local lithium-related projects that are in development. The amount of lithium-related investments has reached a total of RMB 135.639 billion. The number of projects whose agreements have been inked this year has reached 51, translating to an investment amount of RMB 160.75 billion. Yu added that the lithium industry chain in Yichun has reached the “all-encompassing” state, comprising ore mining, salt production, material production, battery production, battery applications, and battery recycling (material recovery).

Ganfeng Lithium was established in 2000. Its core businesses extend across the entire Li-ion battery industry chain: lithium ore mining, lithium metal refining, lithium material processing, Li-ion battery manufacturing, and battery recycling. The five main categories of products that it offers are lithium metal, lithium carbonate, lithium hydroxide, butyllithium, and Li-ion batteries.

Ganfeng Lithium is headquartered in Xinyu, which is adjacent to Yichun. The company therefore has cultivated a firm presence in Yichun over a period of almost 20 years, having set up local subsidiaries such as Yichun Ganfeng Lithium and Fengxin Ganfeng Lithium. Looking at lithium metal production capacity, Yichun Ganfeng now possesses 1,500 tons per year, whereas Fengxin Ganfeng possesses 650 tons per year.

Market intelligence firm TrendForce also points out that other major Chinese battery manufacturers have set up shop in Yichun. Gotion High-Tech signed an agreement to build a local Li-ion battery industry park in March 2021. Then, CATL unveiled a local investment project in September of that same year. Moving into 2022, BYD announced this August that it will add 30GWh per year of production capacity for power batteries in Yichun.

This article is a translation of a Chinese article posted by 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.

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