Chinese electrolyte supplier Capchem announced on August 2 that it plans to spend RMB 1.5 billion (US$232 million) to set up a new production plant in the Dutch municipality of Moerdijk. According to coverage of the announcement by Yicai Global and other Chinese news agencies, the construction of the plant will proceed in two phases. The first phase will consist of an annual production capacity of 50,000 tons for Li-ion battery electrolyte and 100,000 tons for carbonate solvents. The construction of the first-phase facilities is expected to take 3.5 years, and the facilities are scheduled to begin operation in the second half of 2024. With the additions from the first phase of the Moerdijk project, Capchem will have an annual total production capacity of 100,000 tons for Li-ion battery electrolyte and 200,000 tons for carbonate solvent.
Regarding this plan to double its current production capacity, Capchem stated that European battery manufacturers are expanding their operations. At the same time, several major Chinese battery manufacturers have made the decision to set up shop in Europe. Hence, there will be sources of rapidly growing demand to mitigate the risk of excess capacity for battery electrolyte in the future.
EU member states have been tightening their regulatory regimes for vehicle emissions since 2020. With penalties for non-compliance getting harsher, the major European automotive brands are compelled to ramp up their efforts in developing electric vehicles. Volkswagen, Daimler, Renault, PSA, BMW, Volvo, Jaguar Land Rover, etc. have made the electrification of the majority of their offerings a strategic aim.
As the automotive industry adopts battery-electric powertrain technologies, Europe is seeing explosive growth in the demand for lithium batteries used in electric vehicles. According to industry news website CBEA, major battery manufacturers around the world are now focusing their attention on the region and have announced plans to establish production capacity there. These battery manufacturers include CATL, LG Energy Solution, Envision AESC, Northvolt, Samsung SDI, SKI, Farasis Energy, SVOLT, etc. The build-out of new battery plants in Europe will drive the demand for upstream materials and components.
In view of the strong developmental prospect of the European market for electric vehicles and related battery systems, Capchem has opted to build electrolyte production plants in the Netherlands and Poland. By doing so, the company will gain the advantage of being able to provide timely services to its European clients because of the close proximity. Besides this, the other advantages are to maintain growth momentum and to ensure a high quality standard for its products. These benefits, in turn, will translate to an increase in profit.
As for Capchem’s new plant in Poland, it is currently under construction and will have an annual production capacity of 40,000 tons for Li-ion battery electrolyte, 50,000 tons for NMP, and 5,000 tons for CNT solution. The two plants in Europe will synergize to provide effective services to local clients.
Along with the announcement of a new plant in the Netherlands, Capchem also reported its financial results for the first half of 2021. The company posted a YoY revenue growth of 114.23% to RMB 2.557 billion. Battery chemicals now account for nearly 70% of its revenue stream. Also, the net profit of the company rose by 83.85% YoY. The revenue from products related to Li-ion batteries (e.g., additives, lithium salts, and carbonate solvent), supercapacitors (e.g., electrolyte), and primary lithium cells (e.g., electrolyte) came to RMB 1.77 billion for the first half of this year, showing a massive YoY growth of 200.86%.
Factors that attributed to the revenue growth include the rise in electrolyte price, capacity expansion, and the increase in capacity utilization rate. Between this January and June, Capchem’s production capacity for and output of battery chemicals came to 46,385 tons and 34,402 tons respectively. The capacity utilization rate rose to 74.17%, compared with 40.6% for the same period last year. Data from Power Battery Branch of China Industrial Association of Power Sources reveal that electrolyte production in China during the first half of this year reached around 183,690 tons, and Capchem was ranked second place by volume in this market for the period.