Fangyuan Co., Ltd. reported a loss of 427 million yuan last year and plans to terminate projects such as the comprehensive utilisation of used LFP batteries.

On the evening of April 17, Fangyuan Co., Ltd. announced that due to changes in the market environment and the company's business development strategy, it has decided to terminate the investment of no more than 3 billion yuan in the "Battery-Grade Lithium Carbonate Production and Comprehensive Utilization of Scrap LFP Battery Project." Regarding the reasons for the termination of the investment project, the company stated that since the project was launched, the market environment and the company's business development strategy have undergone significant changes. Today (April 18), a representative from the company's board secretary office said that the company's main business still focuses on ternary cathode materials and battery-grade lithium carbonate. The aforementioned "Comprehensive Utilization of Scrap LFP Battery Project" was originally planned to be deployed in the LFP field, but due to fierce market competition and other factors, the company decided to terminate the construction of the related project. "From last year to now, the price of battery-grade lithium carbonate has experienced a downward trend, which has had a significant impact on lithium battery recycling projects," said Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology, in an interview with the Science and Technology Innovation Board Daily. The principle of lithium battery recycling is to preprocess, decompose, separate, and purify scrap lithium batteries to extract valuable resources such as cobalt, nickel, lithium, and copper. If the prices of upstream raw materials such as nickel, cobalt, and lithium plummet, it will lead to reduced profits or even losses for downstream lithium battery recycling companies. Zhang further analyzed that recently, NEV manufacturers have adopted a volume discount strategy to compete for market share, putting tremendous pressure on the entire industry chain. Some upstream battery material suppliers are also squeezed by the strong bargaining power of automakers. "Considering multiple factors, companies in the industry chain have to reduce or adjust their business directions," he said. Looking back at the entire project layout, as early as February 2023, Fangyuan Co., Ltd. disclosed plans to invest no more than 2 billion yuan in two phases to build a project for recycling 300,000 mt of scrap LFP batteries annually and producing 80,000 mt of LFP cathode materials annually. In May 2023, Fangyuan Co., Ltd. established a wholly-owned subsidiary, Fangyuan Lithium, as the implementation entity for this investment project. A month later, in June 2023, Fangyuan Co., Ltd. issued the "Announcement on Changing the Investment Project," changing the aforementioned investment project to the "Battery-Grade Lithium Carbonate Production and Comprehensive Utilization of Scrap LFP Battery Project," with a total investment of no more than 3 billion yuan. In July 2023, Fangyuan Lithium acquired the project construction land through public auction and obtained the property ownership certificate. According to the latest announcement, the company has actually invested 97 million yuan in the project and has processed the land for the project. The company will handle the follow-up matters such as the deregistration of Fangyuan Lithium. "The 97 million yuan invested by the company in the early stage was mainly used for land purchase and other expenses, which can be transferred out and will most likely not affect the company's subsequent performance," the aforementioned representative from the board secretary office further stated. Fangyuan Co., Ltd. stated that currently, the company's product strategy focuses on ternary cathode materials and battery-grade lithium carbonate, improving the capacity utilization rate of existing capacity, and enhancing business and profitability. In the past two years, the company has continuously optimized its production line layout and converted some precursor capacity into lithium carbonate capacity through technological transformation. It is reported that by the end of 2024, the company has achieved an annual production capacity of 24,000 mt of lithium carbonate, which not only enabled the company to achieve part of the construction goals of the lithium carbonate production line in the investment project with low investment but also improved the company's overall capacity utilization rate. In addition, based on the company's business layout adjustment, the company has planned to carry out battery recycling and dismantling business through its wholly-owned subsidiary, Jiangmen Fangyuan Recycling Technology Co., Ltd. (hereinafter referred to as "Fangyuan Recycling"). As of now, Fangyuan Recycling has obtained the project filing and environmental impact assessment approval for the dismantling project. Fangyuan Co., Ltd. is mainly engaged in the R&D, production, and sales of ternary cathode material precursors for lithium batteries and nickel battery cathode materials. It is a leading domestic producer of NCA cathode material precursors for lithium batteries, with its main products being high-end NCA ternary cathode material precursors for EVs. On the evening of April 17, the company also disclosed its 2024 annual report. In 2024, Fangyuan Co., Ltd. achieved a total operating revenue of 2.161 billion yuan, up 2.81% YoY; the net profit attributable to the parent company was a loss of 427 million yuan, compared to a loss of 455 million yuan in the same period last year; the non-GAAP net profit was a loss of 443 million yuan, compared to a loss of 439 million yuan in the same period last year; the net cash flow from operating activities was 73.9142 million yuan, compared to -326 million yuan in the same period last year. Fangyuan Co., Ltd. stated that due to factors such as the decline in metal prices, the slowdown in downstream demand growth, and the decline in product prices, the company's operating performance has declined.