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Western Mining Plans to Invest in Taifeng Pulead so as to Enter Market for LFP Materials

published: 2023-06-28 9:30

In late June, Western Mining released a notice stating that it plans to participate in an auction for a 6.29% stake in Qinghai Taifeng Pulead Lithium Energy Technology. This stake is currently owned by Western Mining’s controlling shareholder Western Mining Group, and the bid price starts at a low of RMB 791 million.

As of July 31, 2022, the assessed value of Taifeng Pulead had reached RMB 13.81 billion. Based on the calculation that factors in the proportion of the paid-in capital, the estimated corresponding value of the 6.29% stake would be RMB 878.46 million.

Under the ownership of the Western Mining Group, the lowest listing price of the 6.29% stake is RMB 790.6157 million. Western Mining intends to bid for the stake in a public auction with a bid price that is exactly the same as the lowest listing price.

Taifeng Pulead manufactures various materials that used in Li-ion batteries. Currently, the company has offerings related to LFP materials, ternary cathode materials, and separators. Moreover, the company have developing its own sources of lithium resources, including lithium brine and lithium carbonate.

Taifeng Pulead operates a manufacturing base in the Nanchuan Industrial Park that is located in Xining, a major city in China’s Qinghai Province. In terms of production capacity, the base accommodates 185,000 tons per year for LFP, 10,000 tons per year for LCO, 8,000 tons per year for ternary cathode, and 420 million square meters per year for separators. Of the total production capacity for LFP, the portion that is in normal operation comprises 25,000 tons, and the first-phase expansion that is now in pilot production comprises 160,000 tons. The company plans to add another 140,000 tons in the upcoming second-phase expansion.

Through its subsidiary Qinghai East Taijinaier Lithium Resources, Taifeng Pulead indirectly holds stakes in a brine lake project in Golmud, which is another city in Qinghai Province. This brine lake, also known as East Taijinar Lake, contains significant reserves of lithium, boron, and potassium. In fact, it is one of the largest of its kind in China.

In terms of financial performance, Taifeng Pulead’s net profit figures for 2020, 2021, and 2022 were RMB 104 million, RMB 866 million, and RMB 4.325 billion respectively. Its annual profit growth rate came to 729.65% for 2021 and 399.59% for 2022.

In recent years, Western Mining has been aggressively acquiring projects related to extracting battery-related metals from brine lakes. The company acquired a 91.4% stake in Qinghai West Magnesium, and it then acquired a 27% stake in Qinghai Jinaier Lithium Resources. These deals gave Western Mining extensive rights to harvest magnesium salts from Tuanjie Lake and various other metals from East Taijinar Lake (e.g., lithium, boron, and potassium).

Western Mining said the acquisition of the 6.29% stake in Taifeng Pulead will enable expansions into the market for LFP materials. This market is downstream to the market for lithium carbonate. Therefore, Western Mining will able to form its own complete industry chain for cathode materials used in Li-ion batteries, as it will be involved in both mining activities and cathode manufacturing. At the same time, this deal will benefit Western Mining in terms of developing its production capacity within Qinghai and operating a world-class base that manufactures battery materials and is conveniently located next to several major brine lakes.

In these past few years, Taifeng Pulead has maintained a high profit margin and a low asset-liability ratio, so its financial situation is fairly healthy. Furthermore, Taifeng Pulead and its subsidiaries currently possess 87 patents related to cathode materials and the extraction of lithium from brine lakes. Among Chinese suppliers for battery materials, Taifeng Pulead is very much ahead of the competition in terms of R&D.

Looking at its manufacturing bases, Taifeng Pulead has three bases for outputting cathode materials and separators and one base for outputting lithium carbonate and potassium-based fertilizers. Besides having the most advanced technologies among Chinese companies for harvesting lithium from brine lakes, Taifeng Pulead has also reached a high degree of maturity with respect to product development, manufacturing processes, and sales channels. All of these will bring favorable investment returns for the company.

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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