Expanding Lithium Electric material Huayou Cobalt Co., Ltd. plans to increase the capital of the joint venture company by nearly 3.1 billion with POSCO CHEMICAL.

On the evening of January 19th, Huayou Cobalt (603799) announced that the company's holding subsidiary, Huayou New Energy, signed the "Huayu Posco shareholder Agreement" and the "Puhua Company shareholder Agreement" with POSCO and POSCO CHEMICAL. Huayu New Energy and POSCO CHEMICAL plan to increase the capital of Huayu Posco and Puhua respectively, with a total capital increase of about 3.083 billion yuan.

It is reported that Huayou Posco plans to increase its registered capital by 1.445 billion yuan, and Huayou New Energy and POSCO CHEMICAL respectively plan to increase their capital to Huayou Posco, of which Huayou New Energy will increase its capital by 867 million yuan and, POSCO CHEMICAL by 578 million yuan. After the completion of the capital increase, the registered capital of Huayou Posco will increase from 336 million yuan to 1.781 billion yuan. Hurray New Energy, POSCO and POSCO CHEMICAL will respectively hold 60%, 7.54% and 32.46% of Huayou Posco. Puhua plans to increase its registered capital by 1.638 billion yuan, and Huayou New Energy and POSCO CHEMICAL plan to increase the capital of Puhua Company respectively, of which Huayu New Energy will increase 655 million yuan and, POSCO CHEMICAL 983 million yuan. After the completion of the capital increase, the registered capital of Puhua will increase from 310 million yuan to 1.948 billion yuan, and Huayou New Energy, POSCO and POSCO CHEMICAL will hold 40%, 9.55% and 50.45% of Puhua respectively.

The battery network learned that the purpose of this capital increase is mainly to expand the production of lithium electric materials.

For Huayou Posco, in order to ensure that the production scale of Huayou Posco's precursors reaches 30000 tons / year (the current production scale is 5000 tons / year), the parties agree to carry out additional projects for the main equipment and supporting equipment of N8X precursors and / or other precursors in the form of NCM or NCMA, and the parties agree to start commercial production of 30000 tons / year of precursors from December 2023.

For Puhua Company, in order to ensure that the production scale of cathode materials in Puhua Company reaches 29000 tons / year (the current production scale is 5000 tons / year), all parties agree to carry out additional projects for the main equipment and supporting equipment of N8X cathode materials and / or other cathode materials in the form of NCM or NCMA. The parties agree to start the commercial production of 19000 tons / year of cathode materials from June 2024 and an additional 10000 tons / year of commercial production of cathode materials from June 2025.

Huayou Cobalt said that the company's strategic planning during the 14th five-year Plan period took the new energy lithium materials industry as the key development core business, and the joint venture with POSCO CHEMICAL to increase capital and expand the new energy lithium materials project was an arrangement made by the company in accordance with the medium-and long-term development strategy, which coincided with the rapid growth demand of new energy lithium materials for the rapid development of new energy automobile industry. The investment and expansion of the joint venture with POSCO CHEMICAL will further integrate the advantages of the company and POSCO and POSCO CHEMICAL in raw materials, technology and market channels, and help all parties to carry out omni-directional cooperation in new energy lithium materials product technology research and development, raw material supply and market promotion, so as to jointly build an internationally competitive new energy lithium materials industry chain.

It is worth noting that on the evening of January 11, Huayou Cobalt Industry announced its performance forecast for 2021, and the company expects to achieve a net profit of 3.7 billion yuan to 4.2 billion yuan belonging to shareholders of listed companies in 2021, an increase of 217.64% 260.56% over the same period last year. The company said that the pre-increase in the company's performance is mainly due to the outstanding results achieved in the implementation of the management strategy of high-end products and industrial integration. In addition, the demand for new energy lithium battery materials continues to grow rapidly in 2021, the production and sales of the company's main products have increased, product sales prices have also been rising, and profitability has been greatly improved.