Chinese Health Food Giant Nanfang Black Sesame Has Entered Battery Industry with RMB 3.5 Investment

On March 31, Nanfang Black Sesame announced that its wholly-owned subsidiary Jiangxi Xiaoheixiaomi Foodstuff will transform into a manufacturer for energy storage batteries. Additionally, Black Sesame plans to invest RMB 3.5 billion in building a plant for manufacturing LFP energy storage batteries in Xinjian District of Nancheng, the capital of China's Jiangxi Province.

According to the company's announcement, the plant will house three production lines for prismatic LFP batteries. Upon completion, the plant is expected to have a production capacity of 8.9 GWh per year.

Black Sesame stated that the development of this project will be carried out in two phases. The first phase will commence this year and involve a production line with a 3.8 GWh per year production capacity for 300Ah energy storage batteries. The second phase will include two production lines with a combined production capacity of 5.1 GWh per year. One of them will manufacture 300Ah batteries, and the other will manufacture 100Ah batteries.                       

The investment in the battery plant is estimated to be around RMB 3.5 billion, with the first and second phases accounting for approximately RMB 1.7 billion and RMB 1.8 billion, respectively. The company also mentioned that the new plant will initially manufacture 50Ah, 100Ah, and 300Ah batteries.

Although Black Sesame is a leading health food brand in China, it has ventured into the Li-ion battery industry, following in the footsteps of a few other Chinese companies that are not battery suppliers to begin with. This move is due to the current boom in the wider market for new energy applications, such as e-mobility and energy storage. With a bullish outlook on the potential of the energy storage market, Black Sesame plans to establish energy storage batteries as a core business alongside its existing health food business. Once the new plant in Jiangxi is in operation, the company anticipates a significant increase in both its scale and profitability. However, it's worth noting that Black Sesame already holds a stake in Tesson New Energy, a company that produces battery components and battery packs.

Tesson New Energy is a joint venture that was established in 2017 by Shenzhen Tesson Holdings, Black Sesame, and Dalian Zhiyun Automation. Currently, Black Sesame holds a 30% stake in the joint venture, while Tesson Holdings and Zhiyun Automation hold 68.80% and 1.20%, respectively.

As a subsidiary of Black Sesame, Xiaoheixiaomi was responsible for supplying the parent company's main health food offerings. However, in 2021, Xiaoheixiaomi relocated its food production lines from their original location in Jiangxi Province to Chuzhou in Anhui Province and Rong County in Guangxi Province. Black Sesame stated that its smart factories in Anhui and Guangxi will make health food products, while the assets and land of the production site in Jiangxi will be upgraded to support Xiaoheixiaomi's battery business. Black Sesame believes that the idle facility buildings in Jiangxi and its local resources will be better utilized if they are transformed into new production capacity for Li-ion or LFP batteries purposed for energy storage applications.

Along with the announcement of the new plant, Black Sesame also stated on the same day that it would cease injecting additional capital into Tesson New Energy. Black Sesame explained that the policy incentives supporting Tesson New Energy's manufacturing project had changed, and the deadline for completing the project conflicted with Black Sesame’s own development schedule. Therefore, there is considerable uncertainty as to whether Tesson New Energy will be able to obtain the necessary government support. As a result, after negotiating with its partners, Black Sesame has decided to discontinue further investments in the joint venture.

Black Sesame also emphasized that Xiaoheixiaomi would not directly compete with Tesson New Energy. Xiaoheixiaomi specializes in LFP prismatic batteries used in energy storage systems, while Tesson New Energy specializes in ternary batteries used in electric scooters, power tools, and so on. Therefore, the two companies differ in terms of cathode material, production technology, and application scenario, and there will be no conflict of interest.

Xiaoheixiaomi’s LFP Battery Project in Jiangxi

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.