Huayou Cobalt invests 50000 tons annual output high-purity nickel project

Recently, Huayou Cobalt announced that it plans to invest in a high-purity nickel project with an annual output of 50000 tons of metal through its wholly-owned subsidiary, Quzhou Huayou Cobalt. The design scale of the project is to produce 30000 tons of nickel sulfate and 20000 tons of electrolytic nickel. The total investment of the project is about 1.494 billion RMB. The construction period of the project is one year.

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Quzhou Huayou Cobalt was established in May 2011, and its business scope includes research and development of resource recycling technology; Huayou Cobalt holds 99.1568% shares in lithium ion battery testing, disassembly, restructuring, recycling, etc.

It is estimated that the global demand for nickel for batteries will increase by more than 20%

Huayou Cobalt said that under the background of rapid development of the power battery market represented by new energy vehicles, the demand for nickel products in the new energy lithium battery material industry where the company is located grew rapidly.

This investment in the construction of high-purity nickel project will help to improve the production capacity of the company’s nickel products, enrich the product structure, and help the company better meet the needs of the downstream market.

Huayou Cobalt, founded in May 2002, is mainly engaged in the research, development and manufacturing of new energy lithium battery materials and new cobalt materials. After more than 20 years of development, the company has formed three business segments: resources, new materials and new energy.

It has created a new energy lithium battery industry ecology from nickel, cobalt and lithium resource development and smelting, to further processing of lithium battery cathode materials, and to resource recycling. Customers include CATL, LG, SK and other international power battery companies.

Nickel is an important part of the lithium battery for electric vehicles. In 2022, nickel metal, as one of the important raw materials for ternary lithium batteries, will significantly increase the demand for nickel from ternary precursors under the trend of high nickel and cobalt removal, and the rise in its price will directly affect the production cost of the entire new energy vehicle industry.

After the outbreak of the Russia Ukraine war, as Russia is one of the largest nickel producers in the world, sanctions, blockades and production stoppages have led to sharp fluctuations in the price of nickel, which has intensified the concerns of electric vehicle companies about nickel supply.

It is predicted that due to the strong demand for electric vehicles, the global demand for nickel for batteries is expected to increase by more than 20% this year, from nearly 330000 tons in 2021 to more than 410000 tons in 2022. The global nickel demand will increase by 8.4% to 2.999 million tons in 2022, while the supply is expected to increase by 11.4% to 2.931 million tons.

Huayou Cobalt expanded the layout of nickel resources

Since this year, Huayou Cobalt has expanded the layout of nickel resources, especially in Indonesia:

On the evening of March 21, 2022, Huayou Cobalt said in the announcement that the company had reached strategic cooperation intentions with Volkswagen and Tsingshan on the upstream and downstream cooperation of the power battery cathode material industry chain, and planned to jointly layout the development of nickel cobalt resources in Indonesia, as well as nickel cobalt sulfate refining, precursor processing, cathode material production and other power battery cathode material integration businesses.

On the evening of September 13, Huayou Cobalt announced that the company and VALE had recently signed a cooperation framework agreement, and the two sides planned to cooperate in the construction of the high-pressure acid leaching wet process project.

Limonite required for the project is supplied by VALE at Sorowako Mine in South Sulawesi, Indonesia. Huayou Cobalt said that the signing of the cooperation framework agreement with VALE is conducive to further strengthening the company’s nickel resource development layout and deepening the bilateral cooperation.

Huayou Cobalt’s 2022 semi annual report also mentioned that the company started the development of nickel laterite resources in Indonesia in 2018. In recent years, the development of nickel resources in Indonesia has been promoted in depth and achieved leapfrog development.

Huayou Cobalt developed nickel materials in Indonesia in advance because Indonesia has a large amount of nickel resources. According to the data, Indonesia is the world’s largest nickel producer, accounting for 38% of the world’s refined nickel production.

Indonesia also has the world’s largest nickel reserves, accounting for about a quarter of the world’s proven reserves. In addition to Huayou Cobalt, GEM and CATL have also invested in nickel resource related projects in Indonesia.

Huayou Cobalt issued GDR for battery materials expansion

On the same day, Huayou Cobalt also released its third quarterly report. In the first three quarters of 2022, the company achieved a revenue of 48.712 billion RMB, with a year-on-year growth of 113.69%;

The net profit was 3.008 billion RMB, up 26.98% year on year. In the third quarter, the company achieved revenue of 17.694 billion RMB, a year-on-year increase of 108.10%; The net profit was 752 million RMB, a year-on-year decrease of 16.44%.

Huayou Cobalt said that the reasons for the growth of revenue and net profit in the first three quarters were mainly the growth of product sales and the inclusion of Palmolive into the consolidation scope.

In addition, Huayou Cobalt plans to issue Global Depositary Receipts (GDRs) and apply for listing on the London Stock Exchange/Swiss Stock Exchange. GDR takes newly issued RMB ordinary shares (A shares) of the company as the underlying securities. The par value of each GDR will be determined based on the conversion rate between the issued GDR and the A-share of the underlying securities.

After deducting the issuance expenses, the raised funds from the GDR issuance of the Company are intended to be used to expand the global capacity of new energy battery materials, acquire, develop and operate upstream resources, strengthen research and development, and supplement the Company’s operating funds.

Since this year, more than 20 A-share companies have planned global GDR issuance and listing. In terms of lithium battery industry chain, GDR issued by KEDA, Shanshan, GEM and Gotion High Tech was officially listed on the Swiss Exchange on July 28. Sunwoda, one of the top 100 lithium ion battery manufacturers, and SENIOR are actively promoting.