Can the "loss King" of Lithium in Salt Lake be resurrected with full blood? * ST Salt Lake resumes listing and enters sprint phase

SMM, July 9 / PRNewswire-Asianet /-- on July 7th, * ST Salt Lake, which is striving to achieve the goal of "resuming listing", released its first-half results forecast for 2021. According to the forecast, * ST Salt Lake is expected to achieve a net profit of 20 to 2.2 billion yuan in the first half of the year, an increase of 44.69 percent and 59.15 percent over the same period last year.

As for the reasons for the change in performance, * ST Salt Lake said that it was mainly due to the rise in commodity prices during the reporting period, which led to the increase in the price of KCl and lithium carbonate products, which led to the improvement of the company's performance.

It is well known that ST Salt Lake suspended the listing of its shares from May 22, 2020 because its audited net profits were negative for three consecutive fiscal years from 2017 to 2019. But in April, * ST Salt Lake said that the company's bankruptcy restructuring plan had been completed and that the company was in a position to resume listing after divesting its lossmaking assets.

Therefore, while announcing the first-half performance notice, the company also disclosed a series of announcements such as the "resumption of listing recommendation" and the "resumption of listing Verification report", and formally submitted the relevant supplementary materials for resumption of listing to the Shenzhen Stock Exchange. From the above series of measures, it is not difficult to see that * ST Salt Lake resumes listing has entered the final sprint stage.

When entrusting relevant institutions to verify the situation related to the resumption of listing of the company's shares, China International Capital Corporation pointed out in the verification report that the current industry environment provides good external conditions for the development of * ST Salt Lake. Since the suspension of listing in May 2020, * ST Salt Lake has continued to focus on the two core industries of potassium and lithium. As a leading potash enterprise, under the background of serious shortage of potash resources and low self-sufficiency rate of domestic potash fertilizer, the development prospect of * ST salt lake should not be underestimated in the future.

As for lithium, not to mention, since the second half of 2020, with the continued popularity of new energy vehicles, the heat of lithium battery plate continues to rise. At present, the world is still facing the shortage of lithium resources. How to extract as many lithium salts as possible with low cost and high efficiency has become the focus of countless enterprises.

In this case, compared with the traditional ore production of lithium salt, salt lake lithium extraction has more outstanding cost and resource advantages. Therefore, extracting lithium from salt lake is definitely the top priority for the future development of lithium electricity industry. During his inspection tour in Qinghai, President Xi Jinping also stressed the need to speed up the construction of a world-class salt lake industrial base, and at present, lithium extraction from Qinghai Salt Lake already has the basis for large-scale expansion. According to the information disclosed by ST Salt Lake, in order to accelerate the strategic plan of promoting the high-quality development of salt lake industry to achieve green rise, the Qinghai provincial party committee and provincial government will make every effort to promote the high-quality development of salt lake industry and win opportunities for the development of salt lake shares.

Citic Securities previously released a research report that 2021 will become the inflection point for the development of domestic salt lake lithium extraction industry. Under the background of the rapid growth of lithium demand and the attention paid to the development of domestic lithium resources, the development of domestic salt lake lithium resources is expected to continue to accelerate. The long-term production capacity of domestic salt lake lithium extraction enterprises has reached 300000 tons, which is expected to account for more than 20% of the global lithium supply in the future and become an important part of the global lithium supply.

According to public data, * ST Salt Lake has about 3700 square kilometers of resources in Qinghai Chaerhan Salt Lake, with a total area of only 5856 square kilometers. Northeast Securities said that Chaerhan Salt Lake in Qinghai is the largest and most abundant soluble potassium and magnesium salt deposit in the country, with broad prospects for comprehensive development. The lake has lithium chloride reserves of 12.04 million tons, ranking first in the country. However, it should be noted that the concentration of lithium in Chaerhan Salt Lake is only 0.003%, and the ratio of magnesium to lithium is as high as 1577.4, which makes it difficult to extract lithium. This is also the reason why * ST Salt Lake initially decided to develop a metal-magnesium integration project in the region, but due to years of investment but no output, and finally the company's other businesses totaled a huge loss of 47.2 billion yuan, * ST Salt Lake directly went against the trend and won the title of "loss king" that year.

According to people familiar with the matter, the company's reported plan is to reach production of 200000 tons of lithium carbonate by 2035, and whether it can be achieved in the future is open to question. It should be noted, however, that Lanke Lithium, a subsidiary of ST Salt Lake, has been put into operation in part of its lithium carbonate project with an annual capacity of 20, 000 tons, and the company's lithium carbonate production has steadily increased from more than 40 tons to 100 tons per day. This is also one of the reasons for the increase in the company's forecast for the first half of the year.

At present, * ST Salt Lake has a total production of 13602 tons of lithium carbonate, an increase of 2300 tons over the same period last year. In addition, * ST Salt Lake related staff have also revealed that some of the devices in the company's new battery-grade lithium carbonate project with an annual production capacity of 20,000 tons have been integrated with the existing 10,000 tons / year lithium carbonate workshop, and the production situation is stable, and it is expected that all the 20, 000 tons of new capacity will be completed and released by the end of this year.

With the continuous popularity of new energy vehicles, the importance of battery-grade lithium carbonate as one of the core materials of lithium battery is self-evident. The price of battery-grade lithium carbonate has skyrocketed since the hardest period of 2020 for new energy vehicles, according to SMM historical prices. As of July 9, the average spot price of domestic battery-grade lithium carbonate was 87500 yuan / ton, up 47759 yuan / ton or 120% from the low price in 2020.

"Click to view the historical price of SMM Metals.

According to SMM research, although the overall lithium carbonate market still shows an oversupply, but considering the upstream forecast of the future lithium price is more optimistic, lithium carbonate price is expected to remain strong.