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CNGR and POSCO Plan to Co-Develop Projects for Refining Nickel and Manufacturing Precursors

published: 2023-06-29 9:30

On June 21, CNGR released two notices on its latest overseas investment projects. First, CNGR and POSCO Holdings plan to form a joint venture for refining nickel and battery-grade nickel sulfate. Second, CNGR and POSCO Future M plan to form a joint venture for manufacturing precursors.

POSCO Holdings is the largest steel producer in South Korea and one of the leading companies operating in the global steel industry. At the same time, POSCO Holdings has established a strong presence in the market for Li-ion batteries, particularly in the segments involving battery materials, battery recycling, and steel components for batteries. POSCO Future M is a subsidiary of POSCO Holdings and manufactures both cathode and anode materials.

CNGR intends to have two of its wholly-owned Hong-based subsidiaries to respectively partner with POSCO Holdings and POSCO Future M. These partnerships will lead to two projects for refining nickel and manufacturing precursors. Both projects will be located in the South Korean city of Pohang.

Regarding the joint venture for refining nickel, CNGR through its subsidiary will have a 40% stake, and POSCO Holdings will have a 60% stake. The fixed asset investment of this project is estimated around CNY 2.2 billion (KRW 410 billion).                                        

Regarding the project for manufacturing precursors, CNGR through its subsidiary will have an 80% stake, and POSCO Future M will have a 20% stake. The total investment is this project, which have a production capacity of 110,000 tons per year for precursors related to high-nickel cathodes, is set to reach around CNY 6.1 billion (KRW 1.09696 trillion). The two projects will be developed by the respective joint ventures and their affiliated companies.

Through its official WeChat account, CNGR said the projects will be located in an industrial park within Pohang. The total investment in the two project is estimated around KRW 1.5 trillion. Together, they would be able to output as much as 50,000 tons of battery-grade nickel sulfate and 110,000 tons of precursors annually. These amounts would be enough to meet the battery installation demand from 1.2 million electric cars every year.

POSCO already has advantages in terms of its position in the global market for battery materials and its dominance in South Korea’s manufacturing industries. These advantages are expected to fully synergize with CNGR’s engineering capability and technological edge with respect to refining nickel and manufacturing precursors. Both parties aim to carry out the development of the two aforementioned projects to the fullest extent. Moreover, this alliance will help both parties minimize the risks related to price fluctuations in the global supply chain. Also, the competitiveness of China’s and South Korea’s respective Li-ion battery industries will be enhanced.

The two projects in Pohang are scheduled to enter the construction phase in the fourth quarter of 203 and the operational phase in 2025. South Korea is the second major country in CNGR’s overseas expansions following Indonesia. With the landing of the new projects in South Korea, CNGR has taken another major step in its internationalization strategy. The projects also represent the first notable success for CNGR in setting up business operations in developed countries.

Deng Weiming, chairman and president of CNGR, said Chinese and South Korean companies complement one another in the industry chain for Li-ion batteries. Furthermore, CNGR has cultivated extensive business relations with South Korean companies in a span of eight years. From the signing of a memorandum of understanding with the government of Pohang in 2022 to the formation of joint ventures with POSCO this year, CNGR believes this alliance will help create a bright future for the global rechargeable battery market.

Established in 2014, CNGR mainly develops, manufactures, and sells precursors used in the production of Li-ion battery cathodes. The company also does processing for the related materials. In terms of offerings, CNGR is committed to high-nickel and low-cobalt ternary precursors as well as cobalt(II,III) oxide that is used in high-voltage applications.

Presently, CNGR operates three major manufacturing bases in China. They are respectively located in Tongren (Guizhou Province), Ningxiang (Hunan Province), and Qinzhou (Guangxi Province). Besides the three bases that located in western, middle, and southern parts of China, CNGR is also developing one more domestic base in Kaiyang (Guizhou), and an overseas base in Indonesia. The company intends to gradually extend its business operations worldwide.

As of the end of 2022, CNGR has set up more than 300,000 tons per year of production capacity for ternary precursors and 25,000 tons per year of production capacity for cobalt(II,III) oxide. The company projects that within these two years, it will be able scale up its production of nickel- and cobalt-based materials to 500,000 tons per year and its production of phosphorous-based materials to 200,000 tons per year. Thus, the company intends to further improve its economies of scale.

Currently, CNGR’s main customers at home and abroad include Tesla, LG Chem, CATL, Easpring, XTC, BTR, L&F, ZEC, and Samsung SDI. All of them are key players in the battery industry chain.

Turning to financial performance, CNGR has been benefiting from the rising demand in the NEV market. The company has been able to process the growing volume of orders by releasing new production capacity. Consequently, CNGR’s ternary precursor business posted CNY 24.628 billion in revenue for 2022, showing a YoY increase of 60.3%. Of the CNY 24.628 billion, overseas sales accounted for CNY 908 million. Also, the gross margin of the ternary precursor business reached 12.6% for the same year, showing a YoY increase of 0.34%.

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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