On the dispute of Lithium Capital in China from the Perspective of Yichun of Guoxuan Suo Mine

On May 22nd, the Guoxuan Hi-Tech Lithium New Energy Industry Project, with a total investment of 11.5 billion yuan, officially started construction in the Economic Development District of Yichun, Jiangxi Province. It is said that the project took only 123 days from inspection to negotiation and from signing to construction.

Yichun's huge lithium reserves are obviously an important reason for attracting Guoxuan Hi-Tech. According to public data, Yichun has proven available lithium oxide reserves of about 2.6 million tons, including the world's largest tantalum and niobium ore, with recoverable lithium oxide reserves of 1.1 million tons, accounting for 31% of the country and 12% of the world. Because of this, Yichun is also recognized as the "lithium capital of Asia".

Strive for the title of "Lithium Capital" in many places, highlighting the ambition of local development

Of course, the city that claims the capital of Li is not the only city in Yichun. For many years, Sichuan Suining, Mianzhu, Yibin, Aba and other places have used the term "Lithium Capital of China", and each of them began to build lithium-related industrial parks around lithium mines. This situation is like a large number of enterprises entering the lithium battery industry many years ago, except that the main body of this wave of competition has been replaced by local governments.

Fundamentally speaking, this phenomenon is the result of the national planning of the new energy industry from the strategic perspective. With the increasingly prominent problems of global climate change, energy crisis and environmental pollution, green, energy saving and environmental protection have become a global consensus. At present, China has solemnly promised to the world "carbon peak in 2030 and carbon neutralization in 2060". In April 2020, the Ministry of Finance and other ministries issued a policy of exemption from purchase tax and subsidies for new energy vehicles, which will continue until the end of 2022 to ease the strength and pace of subsidy decline.

Benefiting from the continued promotion of support policies, the demand of the lithium power industry will soon usher in rapid growth. For local governments, if they can keep up with the times and policy dividends, they are bound to obtain huge economic and social benefits. "not to mention 2021, our (GDP) will surpass Mianyang in the first half of the year." A government worker in Yibin made such a bold prediction in a recent interview with Caijing magazine.

On the other hand, with the soaring price of lithium ore, the demand of new energy companies to participate in the upstream raw material industry is becoming stronger and stronger. It is reported that the price of lithium concentrate has risen rapidly to nearly double since the fourth quarter of last year. At this time, the local and industry leading enterprises went both ways, and the development of the lithium industry was "Lang has the intention of a concubine", and it came naturally.

First support the leader, and then drive the industrial cluster

Although lithium ore itself is of great economic value, even known as "white oil", it is obvious that if we rely solely on mineral resources exploitation and primary processing, we will not be able to make the new energy industry bigger and stronger and stimulate the economic growth of one side for a long time. In this regard, from the point of view of local planning, at present, all "lithium cities" emphasize the need to establish a whole industry chain and improve lithium power industry clusters.

The benefits of building an industrial chain are obvious. From the point of view of enterprises, it can effectively reduce costs and help enterprises better cope with external changes; at the same time, with the rapid development of new energy vehicle industry, the echelon utilization of batteries is gradually recognized by the market. the disassembly and recycling value of low-capacity batteries is also prominent, the establishment of industrial clusters can also better achieve battery traceability, derivative to create greater economic, industrial and environmental value.

However, this is not an easy task. So most "lithium" will start from attracting leading enterprises, and then bring related upstream and downstream industries through these leading enterprises. This strategy is also reflected in the Circular of the General Office of the State Council on issuing the Development Plan of New Energy vehicle Industry (2021-2035). The document pointed out that it is necessary to "give full play to the leading role of leading enterprises, cultivate a number of upstream and downstream collaborative innovation, and facilitate the development of large, medium and small enterprises.

Yichun chose Guoxuan Hi-Tech obviously because of this original intention. According to the Yichun Daily, the project is the first 10 billion yuan project introduced locally, and it is also the largest single project investment by industrial enterprises in Yichun. Yichun City has taken the project as the "number one project" for attracting investment in the city, and the municipal party committee and municipal government have set up a special work leading group to promote the Guoxuan high-tech lithium new energy project. After the completion of the project, it will play a leading and promoting role in speeding up the development of new energy industry and promoting the realization of advanced industrial foundation and modernization of industrial chain in Yichun.

According to the plan, the Guoxuan Hi-Tech Lithium New Energy Industry Project is expected to cover an area of 500 mu and be built in two phases. The first phase of the project will be completed and put into production by the end of 2022, and the second phase is expected to be completed and put into production by 2025, and 500 mu of land is planned to be reserved. Mainly engaged in mining resources development, lithium carbonate extraction, lithium battery research and manufacturing, energy storage system development, etc., to build the whole industry chain system of power battery, after reaching production, it is expected to achieve an annual output value of 20 billion yuan.

Similarly, Yibin began to tie up with lithium giant Ningde Times at the end of 2019 and promoted the project as a "No.1 project". At present, the Ningde era has signed seven projects with Yibin, of which the first phase of the Sichuan era project will be put into production in May this year, with a total investment of about 38 billion yuan. According to relevant personnel, Ningde era 7-10 power battery project has been basically agreed, after full production, including time Geely, including power battery capacity will reach 162GWh.

In contrast, Suining's strategy is slightly different, and its leading enterprises are mainly focused on upstream raw materials, such as Tianqi lithium industry. But now the area is also moving downstream of the industry. At the end of March this year, the honeycomb energy 20GWh power lithium-ion battery project, with a total investment of 7.1 billion yuan, started in Suining, which is locally known as "Project 1 of Project 1". As for the "No.1 Project" mentioned by Suining, it refers to a series of lithium power related industrial projects developed by Suining.

For the areas that have not successfully attracted the top enterprises in the industry, the possibility of building a cluster of the whole industry chain is relatively low. "Lithium Capital" like Mianzhu will be more subdivided, emphasizing its position in the upper reaches of the lithium industry.

But even if you successfully recruit the leading enterprises in the industry, it does not mean that everything will be smooth. According to a recent report in Caijing, lithium resources in Sichuan account for 52% of the country's proven reserves, but the exploitation rate is low. Yan Xianwei, general manager of Tianyi Lithium Industry, said in an interview: "the latent force is huge, but there is basically not much hope for mining. The lithium mine is located in the sacred mountain of ethnic minorities, and national peace outweighs all economic benefits." And compared with Yichun, which started earlier and developed for a long time, the lithium talents and industrial foundation of Yibin are a little immature. Local workers recruited in the Ningde era need to be sent to Ningde headquarters in Fujian for three months of training. Therefore, Caijing concluded that "whether Yibin can be crowned as the 'lithium capital' depends on the follow-up development."

According to Baidu encyclopedia, Yichun, Jiangxi Province shouted the slogan of building "Lithium Capital of Asia" as early as 2008. Before Guoxuan Hi-Tech, the lithium power projects of well-known domestic enterprises such as Hong Kong Guowei, Shenzhen Foster and Ganfeng Lithium have gathered here, and some world-famous enterprises such as LG of South Korea, Sanyo of Japan and GM of the United States have also extended olive branches to Yichun.

Going in the right direction is more important than fighting for the name "Lithium Capital".

Judging from the current situation, the outcome of the dispute over "lithium capital" remains to be seen. The rapid development of the lithium industry, coupled with the local attention to the lithium industry and the relevant support policies in place, for the new energy industry is a great benefit.

However, there are still variables in the competitive situation of enterprises. For example, the change of the state of the local key supporting enterprises is bound to have a great impact on the local industrial planning. A typical example is that Yibin proposed a "two-wheel drive" strategy in 2016 to develop traditional industries such as liquor and cultivate new industries such as new energy vehicles at the same time. Although the vision is good, it does not have a good reputation on behalf of the enterprise Keiyi. In the words of Caijing, "so Yibin focused on the core of new energy vehicles (batteries, motors, electronic controls)." Now its influence in the industry is far greater than that of the local car business. This more or less reflects that correct industrial planning can help local governments take fewer detours.

According to public statistics, there were a total of 217 domestic power battery companies in 2016, but the number has halved in 2019 and has fluctuated around 40 in the first half of this year. The trend of eliminating the weak and staying strong among enterprises is becoming more and more obvious, and the expansion to the upstream industrial chain is becoming more and more urgent.

Since the fourth quarter of last year, the rising price of materials has also made the battery companies in the middle of the year a little bit sandwiched. In addition to making efforts to reduce costs and increase efficiency, one of the best breakthroughs is to actively distribute front-end mineral resources and firmly grasp the raw materials in their own hands. "if there is a mine at home, there is no panic in the heart." as a result, battery companies have laid out the front end one after another, which has become a good choice. It is reported that in the first quarter of 2021 alone, Guoxuan Hi-Tech has spent more than 23.5 billion yuan on upstream materials and battery recycling. Earlier this month, LG Chemical also invested 40 billion won (about 230 million yuan) in Jiujiang Telford Technology, planning to establish a long-term cooperative relationship in the field of copper foil. At the beginning of the year, Yiwei LiNeng announced that it would participate in the subscription of Huayou Cobalt Industry, which is the first time that the company has laid out the upstream lithium electricity raw materials business. It also means there are fewer and fewer opportunities for weaker companies and cities. A group of slow-developing "lithium capitals" are bound to face the problem that "lithium" wants to change in the market competition.

As a matter of fact, "mining at home" may not be so important in the development of new energy industries. For example, Hefei, which is praised by the public as the "best venture capital", has no upstream mineral resources. In recent years, with the help of the east wind of electrification and intelligence, the place has built itself into a "capital of new energy vehicles" in China and even the world, thus quickly completing the magnificent transformation from a second-and third-tier small city to a new base of the global new energy automobile industry.

In 2009, when the project of "Ten cities and Thousand vehicles" of new energy vehicles in China was launched, Hefei was one of the first batch of participants. After more than a decade of hard work, the chain of Hefei new energy automobile industry is becoming more and more perfect. It has gathered more than 120 leading enterprises of new energy vehicles, such as Jianghuai, Jianghuai Volkswagen, Lulai Automobile, Ankai, Changan, Chery (Chaohu), Guoxuan Hi-Tech, Huating Power, Daoyi Electric Motor, University of Science and Technology Intelligence, and Travel. It has formed a complete industrial chain covering complete vehicles, key components (batteries, motors, electronic controls), applications (public transportation, time-sharing leasing), and supporting facilities (charging infrastructure, battery recycling). More than 240000 vehicles were promoted in 2019, accounting for about 5% of the national total. In addition, Hefei is also one step ahead of people to start the layout of intelligent network-connected cars. In September 2020, Anhui's first autopilot 5G demonstration line was officially opened in the Economic Development District of Hefei. it gathers the high-tech application of six plates, such as 5G network, road sensing equipment, roadside traffic facilities upgrade, cloud platform control center, 5G scene application construction, and showroom construction, which can be said to carry the future of Hefei Intelligent Network United cars.

The meaning of life lies not in holding a good hand, but in how to play a bad hand well. If a city is burdened by the name "Lithium Capital" and finally misses the opportunity, it will be sad.