Lithium ore and lithium iron phosphate layout "go hand in hand"! Yahua Group issued two announcements in a single day to expand the lithium power business.

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SMM December 15 news, last night, Sichuan Yahua Industrial Group issued two announcements, one is to enrich the company's layout of lithium mines, and the other is its first layout of the current booming lithium iron phosphate cathode material business.

In terms of lithium mining, Yahua Group announced that its wholly-owned subsidiary, Yahua International Investment and Development Co., Ltd., intends to subscribe for 80 million shares of Australia's EV Resources Co., Ltd. (referred to as "EV") at a price of A $0.045 per share, accounting for 9.5% of the total share capital of EV.

On December 14, 2021, the two sides jointly signed the Equity subscription Agreement. According to the announcement, EV is rich in mineral resources, including lithium resources projects such as the Xiaohe Lithium-Tin-Tantalum Project in Australia (80% interest), the Serbian Clay Lithium Boron Project (22% interest), the Weiinbany Project in Austria and the East Alps Lithium Mine Project (80% interest).

Ya Hua Group has cooperated with EV to develop its existing lithium ore resources. It will help to strengthen the layout of the company's upstream resources in the lithium industry, and provide sufficient lithium resources for the future development of the lithium industry.

At present, Ya Hua Group has signed lithium concentrate off-take agreements with Yinhe Lithium Industry, Lijiagou spodumene Mine, Australia Core, etc., in which the agreement with Yinhe Lithium Industry will be implemented until 2025, agreeing that Yinhe Lithium Industry will supply no less than 120000 tons of lithium concentrate to Ya Hua Group every year.

As we all know, since 2021, in the context of the favorable environment of new energy vehicles, the price of lithium is rising continuously. As of December 15, the average spot price of lithium metal (≥ 99%, industrial, electricity / domestic) has risen to 1155000 yuan / ton, a three-year high. This price is up 670000 yuan / ton from the beginning of the year, an increase of 138.14%.

"Click to view the historical price of SMM Metals.

But even so, considering that the release rate of lithium resources is limited by mine project planning, geographical factors and political risks, and the rate of production expansion is lower than the growth rate of demand, SMM still believes that there will still be a supply gap in the lithium market in 2022 and 2025. "View details

This view also coincides with Guotai Junan's forecast, which has previously said that due to the supply bottleneck of lithium resources-the new capacity of existing lithium resources projects is limited, the construction cycle of mining projects is long, and the tight supply and demand situation in 2022 will continue. And due to the rising cost of lithium prices, lithium salt prices rise, lithium power enterprises in the middle and lower reaches have also begun to join the battle for lithium mines. The fierce competition for lithium ore can be seen from the previous Ningde era, the acquisition battle of Ganfeng Lithium and American Lithium for Millennium Lithium, Shengxin Lithium's application for the right to exploit two lithium mines in Ukraine, Ningde era's partnership with YPF Lithium to find suitable lithium ore development in Argentina, or Ganfeng Lithium's announcement of its new expansion plan for the Goulamina spodumene project.

On the same day, Yahua Group also announced that the company's wholly-owned subsidiary, Yahua Lithium Industry, plans to set up a joint venture company, Yaan Xiamen Tungsten New Energy Materials Co., Ltd., with Xiamen Tungsten Xineng and Cangya Investment. Phase construction of 100000 tons of lithium cathode material production line, engaged in product research and development, preparation and sales of lithium iron phosphate. Xiamen tungsten Xinneng accounts for 83%, while Yahua lithium industry accounts for 10%.

According to public data, the business scope of Yahua Lithium Industry includes the sales of lithium hydroxide monohydrate, lithium carbonate and other lithium salt products. According to the announcement, the investment will help to enrich the variety of the company's lithium products, enhance the production capacity of lithium carbonate and expand the company's business scale.

It is worth mentioning that the production line with an annual output of 100000 tons of lithium cathode materials built by Ya'an Xiamen Tungsten Xineng will be very close to the lithium salt production line of Yahua Group, and the by-product of its production line can be used to produce lithium carbonate. So this decision will also help to increase the production capacity of lithium carbonate, which can be said to kill two birds with one stone.

According to media sources, the current lithium salt products of Ya Chemical Group, including lithium carbonate and lithium hydroxide, total about 43000 tons. Production is expected to be 30, 000 tons in 2022 and 20, 000 tons in 2023, with a total planned capacity of about 100000 tons.

The most interesting thing is that the layout of lithium iron phosphate cathode material is the first layout of Yahua Group in this field. Recently, as the lithium iron phosphate battery vehicles continue to catch up with and surpass the ternary battery, the lithium iron phosphate race track is becoming more and more popular. According to the November power battery data of the China Automobile Association, a total of 11.6 GWhs of lithium iron phosphate batteries were loaded in China in November, up 145.3 percent from the same period last year, while 9.2 GWhs of ternary batteries were loaded in the same period, up 57.7 percent from the same period last year.

In the context of this good situation, recently, many enterprises, including Tianyuan shares, Zhongwei shares, Salt Lake shares, Chuanfa Dragon Python, Deguang shares, Huayou Cobalt Industry and so on, have expanded their layout in the field of lithium iron phosphate. And the spot price of power lithium iron phosphate is also high. According to the spot price of SMM, as of December 15, the average spot price of power lithium iron phosphate was 95000 yuan / ton, which has already set a three-year high, up 57000 yuan / ton from the beginning of the year, or 150%.

"Click to view the spot market of SMM new energy products.

It is clear that this is far from the end of the continued boom in the lithium sector. According to SMM's recent research, at the raw material end, the manufacturing cost of lithium iron phosphate enterprises continues to rise driven by lithium salt, while the demand side, power market demand continues to increase, the market mainstream lithium iron phosphate enterprises are still tight at full production and sales, and downstream acceptance of price increases has increased. In terms of price, the price of lithium salt is still in an upward trend, so SMM expects that the price of lithium iron phosphate will continue to rise in the future, driven by the raw material end. "View details