On May 31, Huayou Cobalt’s wholly-own subsidiary Guangxi Huayou Lithium held a ceremony to mark the completion of a lithium salt project that has production capacity of 50,000 tons per year. The project is the Huayou Cobalt’s first business operation for manufacturing lithium salts in China. Following this event, the project will be undergoing pilot production and equipment calibration.
Source: Huayou Cobalt
Located in the Longtan Industrial Park of Yulin, a city in Guangxi Province, the project is an integrated manufacturing base for battery materials. Spanning an area of 368.83 mu, the project entered the construction phase in September 2022 and took around nine months to complete. Huayou Cobalt invested a total of CNY 2.116 billion into the project.
This is a view of the entire newly-built lithium salt project in Guangxi. (Source: Huayou Cobalt)
From its core business of cobalt materials, Huayou Cobalt has extended its presence across the entire supply chain for batteries and battery materials. The company can now be considered as a vertically-integrated manufacturer that is able to draw cobalt- and nickel-related resources to produce materials used in Li-ion batteries. Since upstream resources such as battery metals represent the foundation of the vertical integration strategy, Huayou has been making massive investments in this section of the supply chain.
In 2021, the market for new energy vehicles (NEVs) was booming, and demand was outstripping supply for lithium-related sources. At that time, Huayou Cobalt spent USD 422 million to acquire all the shares and debts of Prospect Lithium, which was a mining company that held a stake in the Arcadia Lithium Mine in Zimbabwe. The transaction was completed in April 2022.
Then, in June 2022, Huayou Cobalt reactivated the Arcadia Lithium Mine and injected another CNY 275 million into the project. Furthermore, the board of Huayou Cobalt approved the plan to have Guangxi Huayou Lithium to begin the development of a lithium salt project.
On March 20 of this year, Huayou Cobalt announced that equipment installation and calibration has finished at the Arcadia Lithium Mine, and the project is now in operation and has outputted its initial batch of products. Once the project is fully ramped up, it will be able to process 15,000 tons of lithium ores per day. At this rate, the project will be able to supply enough lithium for the production of around 50,000 tons of lithium carbonate per year.
Located 35 kilometers from Zimbabwe’s Mashonaland East Province and 35 kilometers from Harare, the Arcadia Lithium Mine has a logistical advantage due to its close proximity to railways, highways, and ports.
According to the data previously released by Prospect Lithium, the Arcadia Lithium Mine held around 72.7 million tons of standard lithium resource as of October 2021. The lithium oxide standard of the ores in the project came to 1.06%. The amount of lithium oxide held by the project was estimated to total 770,000 tons (which would convert to 1.9 million tons of LCE). Of the 72.7 million tons of standard lithium resources, the amount that was recognized as reserve was 43.3 million tons. The lithium oxide standard of the reserve came to 1.19%, and the amount of lithium oxide within the reserve reached 504,000 tons (which convert to 1.24 million tons of LCE).
In a report released by Huayou Cobalt in 2022, the company stated that it possessed a mine in Zimbabwe for the production and sorting of lithium ores. The mine mainly produces lithium concentrate that is within spodumene and lithium feldspar. The lithium concentrate from the mine will then be transported to China for further refining and the production of lithium salts. The aforementioned mine is the Arcadia Lithium Mine.
In terms of financial performance, Huayou Cobalt’s revenue reached CNY 63.034 billion for 2022, up by 78.48% YoY. Its net profit attributable to parent totaled CNY 3.91 billion for the same year, up by 0.32% YoY. For 1Q23, the company posted CNY 19.11 billion in revenue, reflecting a YoY growth of 44.64%. Its net profit for the same quarter reached CNY 1.024 billion.
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.