Australian lithium mining company Pilbara held its second spodumene concentrate auction on September 14, and the final auction price was US $2240 / dry ton, which continued to reach an all-time high after the last round of high price of US $1250 / dry ton on July 29th, far exceeding the current mainstream price of about US $1000 / dry ton of lithium concentrate, which can be said to be much higher than market expectations.
Affected by the high-price auction of lithium ore, the quotations of lithium carbonate and lithium hydroxide also maintained a sharp upward trend in September, and it can be said that prices have been raised to varying degrees every day. According to the spot average price of SMM, by the end of September, the price of domestic battery-grade lithium carbonate has risen to 180000 yuan / ton, and the average price of battery-grade lithium hydroxide has also reached 176000 yuan / ton. Compared with the end of last year, battery-grade lithium carbonate and lithium hydroxide prices have increased by 250% and 300%.
The price of the upstream lithium resource has risen frequently, and at the same time, the price pressure has been transferred to the mid-stream material end, so in such a dilemma, how much has many battery manufacturers been affected, and then how to break the situation?
The profitability of battery manufacturers has been affected.
Since the beginning of this year, the prices of raw materials in the upstream of lithium electricity have increased greatly, among which the products concerned by the market, such as hexafluorine, lithium carbonate and even spodumene in the upstream, have doubled. Even if we only look at the four most important materials, lithium iron phosphate cathode materials have risen from 35000 yuan per ton at the beginning of the year to 60, 000 yuan per ton at present, and the price of the most mainstream 5-series power single crystal materials has risen from 120000 yuan per ton to 180000 yuan per ton. the negative electrode of artificial graphite (the proportion of natural graphite is very low) rose from 36000 yuan / ton to 50, 000 yuan / ton. The electrolyte has increased from 50, 000 yuan / ton to the current 100000 yuan / ton.
The prices of the major lithium raw materials in the middle and upper reaches have risen to varying degrees, which undoubtedly affects the battery manufacturers' gross profit margin in the first half of the year to a certain extent:
1) the gross profit margin of the power battery system in Ningde era, the leader of lithium electricity, was 23% in the first half of this year, down 3.5 pcts from the same period last year and 3.56 PCTS from the previous year.
2) the gross profit margin of BYD's automobile, automobile-related products and other products business in the first half of the year was 19.53%, a month-on-month decline of 5.67pcts.
3) the gross profit margin of Yiwei lithium energy lithium-ion battery business in the first half of this year was 22.95%, down 1.31% from the same period last year, and 3.18pcts from the previous month.
4) the gross profit margin of Guoxuan Tech's power lithium battery business in the first half of this year was 19.27%, a month-on-month decline of 5.45pcts.
But the impact of profitability may not be over, before battery manufacturers and upstream materials are mostly signed long-term agreement, so although raw material prices rose sharply in the first half of the year, but the gross profit margin still did not decline much, but if raw material prices remain high in the following time, or even continue to rise, the increase in raw material prices on battery costs will be concentrated in Q4 or even next year.
At present, due to the strong demand downstream and the lower-than-expected expansion of overseas lithium mines, the prices of raw materials such as spodumene, lithium salt and electrolyte are still in an upward period, and there is no doubt that the price of lithium battery will not be reduced as in previous years, but even if the price of lithium battery remains unchanged, the profitability of lithium battery enterprises will continue to decline. However, if the price of lithium battery increases due to the rising cost of the battery, the cost of the battery system may return to 1 yuan / Wh, which will also be transmitted downstream, pushing up the cost of electric vehicles, thus affecting consumers' choice of new energy vehicles, thus affecting the sales of electric vehicles.
Battery manufacturers expand their production frequently, and their costs soar.
It can be said that this year is the first year of production expansion of the major battery manufacturers, and almost all the battery manufacturers with the top battery installation have carried out production expansion plans to varying degrees. For example, AVIC Lithium, Yiwei Lithium Energy, Funeng Technology, Honeycomb Energy, Xin Wanda, etc., all have a capacity expansion of nearly 10 times compared with that at the end of 2020. BYD, Guoxuan Tech and other battery manufacturers also have 3-5 times battery capacity expansion.
The leading Ningde era thoroughly embarked on the road of production expansion as early as last year. In February, July and December 2020, the Ningde era invested 26 billion yuan in new 52GWh production capacity, 20 billion yuan in new 52GWh capacity and 39 billion yuan in new 130GWh production capacity. In February and August this year, it invested 29 billion yuan and 58 billion yuan to increase the power battery capacity of 95GWh and 77GW, making the planned production capacity of Ningde era directly exceed 600GWhh in 2025. It is expected to lead the global power battery industry into the "TWh" era.
Overall upward layout, acquisition of lithium mines
The acquisition of upstream this layout, cutting-edge battery manufacturers have already taken action. According to the latest Sept. 28 news from Millennial Lithium, the previous agreement with Ganfeng Lithium has been terminated and the company has decided to accept the Ningde era acquisition proposal for C $377 million, but since Ganfeng Lithium had an offer agreement of C $3.60 per share with Millennial Lithium in July, Ningde Times needs to compensate Millennial Lithium for US $10 million in liquidated damages paid to Ganfeng Lithium. This also means that Ningde era officially took a stake in the African Manono project, winning one of the world's largest lithium mines in one fell swoop.
This is not the first time that the Ningde era has intervened in the upstream lithium mine. On the other day, Suzhou Tianhua Times New Energy Industry Investment Company, an important equity company of the Ningde era, reached an agreement with the Australian mineral exploration company AVZ Minerals that the $240 million (RMB 1.5 billion) injection from the Tianhua era will be used to develop the lithium project Manono, in the Democratic Republic of the Congo (DRC). Tianhua Times will acquire a 24% stake in the project company. At the same time, as early as September 2020, the Ningde era also spent 8.58 million Canadian dollars (44 million yuan) to buy a stake in Canadian mining giant Neo Lithium.
Several ores chosen for layout in the Ningde era can be said to be world-class major mines. At a time when lithium resources are in short supply, mines are on hand to ensure a long-term and stable supply of lithium raw materials in the future of the Ningde era. Manono is one of the hard rock lithium deposits with the largest reserves and the highest grade discovered at present, with proven resources as high as 269 million tons and estimated lithium reserves of up to 400 million tons. The grade of lithium oxide is 1.65%, which is at a high level; The Pastos Grandes Salt Lake developed by Millennial Lithium has a resource capacity of 4.12 million tons of LCE (measured + indicated), a lithium ion concentration of 427 mg / L, a project design capacity of 24000 tons of lithium carbonate per year, a project life of more than 40 years, and a production cost of $3388 / ton (2019 data).
Of course, battery manufacturers with this sense of crisis are not alone in the Ningde era. Almost all battery manufacturers with the highest power battery load have plans for upstream layout. For example, Guoxuan Hi-Tech, which has successively laid out upstream raw materials such as positive electrode, negative electrode, copper foil, separator, electrolyte and battery recycling, announced in August this year that it had signed a contract with the governments of Yifeng County and Fengxin County of Yichun City. To build a comprehensive development and utilization project with an annual output of 50, 000 tons of lithium carbonate and 8 million tons of mining and mineral processing in the two places; Another second-line battery manufacturer Yiwei LiNeng announced on July 9 the acquisition of 28.125% stake in Jinkunlun Lithium Industry Co., Ltd., whose main business is metal lithium, with a planned annual production capacity of 3000 tons and an annual production capacity of 1000 tons. the joint venture between the two companies will build projects with an annual capacity of 30, 000 tons of lithium carbonate and lithium hydroxide. In addition, Honeycomb Energy, which produces cobalt-free batteries for the first time in the industry, also participated in the project construction of Guangxi Tianyuan New Energy Materials Co., Ltd. in April 2018 with an annual production capacity of 25000 tons of battery-grade lithium hydroxide.
Sign the agreement order to control the cost
Since the beginning of this year, the major battery manufacturers have carried out large-scale production expansion, and at the same time, in order to ensure that the planned power battery capacity has an adequate supply of raw materials, and under the trend of rising prices of raw materials, the major battery manufacturers have also signed long orders with major companies at the material end in advance, not only fixing the material cost, but also ensuring the future supply channels.
Take the electrolyte and lithium hexafluorophosphate with the biggest increase as an example, the battery manufacturers with the highest installed capacity of power batteries are basically actively signing long-term agreement orders in the middle of the year:
1) in July, BYD signed the supply contract for lithium hexafluorophosphate products with Skyline and Dofurdo, respectively. From July 2021 to December 2022, Xintai Materials will supply Shenzhen BYD with no less than 3500 tons of lithium hexafluorophosphate and 3600 tons of lithium hexafluorophosphate in 2023, while Polyfluorodo will provide a total quantity of not less than 6460 tons of lithium hexafluorophosphate.
2) on May 27th, Ningde Times and Tianci signed a long order of 15000 tons of lithium hexafluorophosphate corresponding to the quantity of electrolyte products (120000 tons), the time period is until June 30 next year.
3) on July 16, Funeng Technology and Polyfluoroduo signed a large order, and Funeng Technology will purchase lithium hexafluorophosphate with a total quantity of not less than 1700 tons from Polyfluoroduo.
In addition, other raw materials with small price increases are also favored by power battery manufacturers, seeking cooperation or signing big orders:
1) on August 31st, 2021, LG New Energy and Star Source material announcement signed a long order of 4.3 billion to supply it with wet-coated lithium diaphragm for a cooperation period of 4.5 years. 2) on August 3, 2021, Yiwei LiNeng and Shanghai Enjie set up a joint venture company in Jingmen to build a 1.6 billion square meter diaphragm project.
Open up new ways to discard lithium and use sodium
Many battery manufacturers compete for the layout of upstream lithium ore resources, the fundamental reason lies in the scarcity of lithium resources, and the taste of domestic salt lakes is lower than that of foreign salt lakes. Therefore, in addition to stepping up acquisitions in upstream lithium mines and salt lakes, it is also a choice for battery manufacturers to change to a lower-cost and richer resource as the raw material of the battery.
Previously, at the Na-ion battery press conference of Ningde Times, the leading power battery company, it showed that its first-generation Na-ion battery. The energy density of the cell unit has reached 160 Whhand kg, which is only slightly lower than that of lithium iron phosphate battery. However, it has a good performance in terms of low temperature attenuation, system integration efficiency, thermal stability, and so on. In fact, from the point of view of preparation technology and equipment, there is not much difference between sodium-ion battery and lithium battery. Even the four main materials and related auxiliary materials are not completely subverted, except that the positive pole has changed a lot, the others have only changed a little.
Most importantly, from the upstream resource end, because sodium ion batteries use little or no rare metals, they mainly use sodium carbonate rather than lithium carbonate or lithium hydroxide, which are commonly used in lithium batteries, the latter two are extremely expensive, and the quotation has soared to about 180000 yuan / ton, while the price of sodium carbonate, the main raw material for sodium ion batteries, is only 2,000 yuan / ton, and the resources are extremely rich. The future will not be affected by fluctuations in commodity prices.
Previously, the market thought that sodium-ion batteries had a low energy density, so they could only be used in low-density areas, but in the AB battery solution developed in Ningde era, sodium-ion batteries and lithium-ion batteries could be integrated into the same battery system at the same time. By mixing and matching the two kinds of batteries according to a certain proportion and arrangement, they were integrated in series and in parallel, and then balanced control of different battery systems was carried out through the precise algorithm of BMS. In this way, we can learn from each other, which not only makes up for the deficiency of energy density of sodium ion battery at this stage, but also gives full play to its advantages of high power and low temperature performance, so the lithium-sodium battery system can adapt to more application scenarios.
Generally speaking, because it is not inferior to lithium battery in terms of rate performance, high and low temperature performance and safety performance, and has the advantage of considerable cost and easy availability of resources, so sodium ion batteries will make a difference in low-and medium-end electric vehicles, two-wheelers, energy storage, data centers and other fields. According to the forecast of Ningde era, sodium ion batteries will form a basic industrial chain as early as 2023.
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