On March 27, Ganfeng Lithium announced in a press releases that it has signed a strategic cooperation framework agreement with the administrative committee of the Xilingol League in China’s Inner Mongolia. According to the agreement, both parties will leverage their respective advantages in resources, capital, technologies, and management capability to jointly develop a local industry chain for Li-ion batteries.
According to the official website of the administrative committee, the Xilingol League is located in the central part of Inner Mongolia. It borders Mongolia to the north with a border length of 1,103 kilometers. To the west is the city of Ulanqab. To the south, it neighbors Hebei Province, and to the least, it is connected t Chifeng, Tongliao, and the Xing’an Leauge. Furthermore, the Xilingol League is located 460 kilometers away from Beijing in a straight line.
Ganfeng’s announcement reveals that the cooperation agreement has three main components: (1) the formation of a complete industry chain for the comprehensive utilization of lithium resource; (2) the expansion of the scope of applications for battery energy storage technologies; and the provisioning of support for Ganfeng to legally obtain prospecting and mining rights for niobium and tantalum ores in the region.
Specifically, both parties will accelerate the development of the phase 1 of a local project for the comprehensive utilization of lithium resource. Furthermore, they will be upgrading another local project that mines and selects niobium and tantalum ores. The mining and sorting capacity of this project is already at 600,000 tons per year. Also, both parties will jointly develop new projects for manufacturing LFP cathode materials, next-generation Li-ion battery cells, and battery packs. All in all, a complete industry chain for Li-ion energy storage batteries will be established in the Xilingol League.
At the same time, both parties will collaborate to expand the range of application scenarios for energy storage batteries. They will also push for the electrification of buses, sanitation service vehicles, and fire trucks. Additionally, the administrative committee of the Xilingol League will support the purchasing of Ganfeng’s batteries that are made locally. The government agencies and private companies operating in the region will assist in expanding the market for Ganfeng’s products and services.
Both parties will cooperate in prospecting and mining niobium and tantalum ores. In accordance with the relevant laws and regulations, Ganfeng will receive government support as it obtains the prospecting and mining rights in the area surrounding a local project for mining niobium and tantalum ores. Moreover, in accordance with the interim measures for the development of the emerging and strategic industries in the Xilingol League, the administrative committee will support Ganfeng’s plan to set up projects related to new energy technologies.
Ganfeng stated that the aim of the cooperation agreement is to use the strengths of both parties to jointly build an industry chain that encompasses ore mining, material production, battery production, application development, and the comprehensive utilization of lithium resource. The cooperation agreement will help not only in ensuring a stable supply of lithium resource for the company but also improve its vertical integration capability. Lastly, it will enable the company to raise production for its lithium salts and Li-ion batteries.
In terms of financial performance, Ganfeng’s realized revenue for 2022 came to RMB 41.823 billion, showing a YoY increase of 274.68%. Its net profit attributable to the shareholders of its listed companies for 2022 came to RMB 20.478 billion, showing a YoY increase of 291.67%. This, in turn, led to a YoY rise of 281.30% in its EPS to RMB 10.17.
Ganfeng pointed out that due to the rapid growth of the global market for new energy technologies, the downstream demand for lithium salts has also grown significantly. Hence, prices of Ganfeng’s lithium salts has shown a large YoY hike. The company has also succeeded in posting a large YoY increase in profit because its sales of Li-ion batteries have been turbocharged by the rapid growth of the market segments for EV power batteries and energy storage batteries.
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.