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Huayu Cobalt and LG Chemical joint venture expansion of 437.1 billion won
LG Chem and Huayu Co have cooperated before. In 2018, the two companies jointly established Leyou New Energy (Wuxi) and Huajin New Energy, which are engaged in the production of ternary cathode materials and precursors respectively.
Huayu Cobalt has a long history of cooperation with LG Chem
Leyou New Energy has a total investment of US $1 billion, registered capital of US $430 million, planned production capacity of 100,000 tons, annual output value of 20 billion RMB. At present, the first phase of the project has achieved volume production, which is expected to achieve the first phase of the third quarter of this year, 45,000 tons of production target.
In addition, the K-Battery Alliance, a group of South Korean companies including LG New Energy and LG Chemical, plans to spend $9 billion in Indonesia to move from smelting and refining raw nickel to manufacturing precursors and cathode materials and the whole industry chain of accumulator and finishing product assembly. Huayu cobalt, a deep partner of companies such as LG Chem and POSCO Holdings, is also a participant in the investment plan.
Huayu Cobalt was founded in 2002, as one of Top 5 Cobalt salt resources companies in China, mainly engaged in new energy lithium electrical materials and cobalt new materials research and development, manufacturing. After 20 years of development, the company has completed its headquarter in Tongxiang, resources in overseas, manufacturing base in China, the market in the global space distribution; As a global leader in the cobalt industry.
Huayou Cobalt has accelerated the transformation process of integration of new energy lithium electric materials by relying on resources and financing channel advantages since its listing in 2015.
The current business of the company involves development of nickel, cobalt and copper resources in the upstream, cobalt salt/electrodeposition copper/nickel sulfate smelting in the middle stream, production of downstream precursor and cathode materials, and recycling business.It has formed resources, new materials and new energy business plates, and created a new energy lithium industry ecology, from the development and smelting of cobalt and nickel resources, to the deep processing of lithium cathode materials, and then to the recycling of resources.
Since this year, Huayu Cobalt Industry accelerated the pace of foreign investment. On the evening of January 19, Huayu Cobalt signed two agreements with POSCO and POSCOCHAMICAL for the expansion of the new energy lithium materials project.
Huayu New Energy and POSC Chemical plan to increase the capital of Huayu Posco and POSC chemical respectively. “ZPHE”, a battery anode joint venture between POSCO and Huayu Cobalt, has started the second phase of investment and will enter commercial production in the first half of next year.
Huayu Co and LG Chem have teamed up again to build 66,000 tonnes of NCM
Huayu cobalt and LG Chem plan to build 660 million NCMA materials, LG Chem will hold a 51-percent stake in LGBCM, B&M Science as one of Top 10 lithium cobalt oxide cathode material companies in China will hold a 49-percent stake in LGBCM. At the same time, LGBCM plans to build an annual output of 66,000 tons of ternary cathode materials capacity.
In the first quarter of this year, B&M Science (a subsidiary of Huayu Cobalt Holdings) posted exports of US $267 million, which was more than that in the whole of last year. The investment in Chemical’s LGBCM, the joint venture production of NCMA high nickel cathode materials, is expected to further deepen the link with LG Chemical and LG New Energy, expanding the global lithium electricity market.
In recent years, Huayou Cobalt Industry has continuously improved and perfected the industrial chain layout of lithium electrical materials in new energy sources, relying on the advantages of non-ferrous resources, forming ternary precursors from cobalt-nickel resource development, green smelting and processing, ternary lithium iron phosphate cathode materials to the new energy lithium electricity industry ecology of recycling resources. LGBCM plans to build an annual capacity of 66,000 tons of ternary cathode materials, with a total investment of 437.1 billion won.
Of which, 60 percents of the total investment amount was about 1.403 billion RMB, which was financed by B&M Technology and LG Chem according to the time agreed in the agreement, the remaining 40% , or 935 million RMB of investment, will be raised by LGBCM through borrowing or issuing corporate bonds. At present, Huayou Cobalt has acquired a 31% stake in Huafei nickel and Cobalt , which is owned by Yongrui Holdings , and Huayou also invested 120 million RMB in Yacheng New Materials, Huayu Cobalt is also in a partnership with Volkswagen (China) and Aoyama Holdings, PT Vale Indonesia Tbk, etc.
It is worth noting that POSCO is planning to expand its production of negative materials for batteries in China through a joint venture with Huayu Cobalt, Huayu Cobalt denied: “The company and POSCO have no cooperation battery anode material.” A person familiar with the matter said that ZPHE, a joint venture between POSCO and Huayu Cobalt, had begun the second phase of investment and planned to increase its annual output of negative materials from 5,000 tonnes to 35,000 tonnes and will be put into commercial production in the first half of next year.
In addition to cathode materials, Huayu Cobalt expands its upstream resources
LG chemical held a 100 percents stake in LGCBM, which was less than a year, before the deal and has since reduced its stake to 51 percents, according to the announcement. By public information, Huayu Cobalt acquired a 38.62% stake in B&M Science technology in the 2021, making B&M the second largest market for cathodes in China.
The 2021’s market share among the highest domestic manufacturers of B&M Science
According to statistics, the 2023 company’s cathode production capacity will reach 201,500 tons per year. In addition to cathode materials, Huayu Cobalt has also expanded its business into lithium resources, acquiring all the shares of Prospect Lithium, which owns 1.24 million tons of lithium carbonate equivalent reserves in Zimbabwe’s Arcadia project, Huayu Cobalt’s lithium-ion 2023 is expected to contribute 28 percents of gross profit.
As the company continues to add precursors and cathode materials, which can effectively quell fluctuations caused by changes in metal prices such as copper, cobalt, nickel and lithium, which is also expected by 2023 net profit growth from 84.3 percents year-on-year to 17.9 percents in 2022.
