[SMM] supply 90, 000 tons of lithium in 7 years! Ganfeng Lithium Industry signs New contract with LG to guarantee Market

SMM, 20 Sep: recently, Ganfeng Lithium Industry announced that the company and LG Chemical signed a "supplementary contract for the supply contract" from January 1, 2019 to December 31, 2025. The company and Ganfeng International have increased their sales of lithium hydroxide and lithium carbonate products to LG Chemical for a total of 45000 tons, with prices adjusted according to market price changes. After the signing of the supplementary contract, from January 1, 2019 to December 31, 2025, the total amount of lithium hydroxide and lithium carbonate products sold by the company and Ganfeng International to LG Chemical totaled 92600 tons.

Core Tips:

Ganfeng Lithium Industry: acquisition of self-sufficiency in upstream mine raw materials

Ganfeng Lithium Industry: rapid expansion of production capacity and expansion of Global Market share

Ganfeng Lithium Industry: working with strong International Enterprises to ensure Future production and Marketing

Acquisition of self-sufficiency in upstream mine raw materials

In recent years, Ganfeng lithium industry has been purchasing upstream mines. As shown in the 2017 annual report, the company has put into production two spodumene mines, Mount Marion in Australia and Ningdu River Source in Ganzhou, Jiangxi Province. There are four lithium resources currently under development. Two of them are spodumene and two are brine. SMM collated the details of the lithium resources of Ganfeng lithium industry as of December 2017:

Lithium resources that have been put into production

(source: Ganfeng Lithium Industry, SMM)

1 Mount Marion

Based on production capacity and production as of December 31, 2017, Mount Marion is the second largest spodumene mine in the world. Ganfeng lithium, which has a 43.1 per cent stake, has signed a long-term underwriting agreement to underwrite all lithium raw materials produced by Mount Marion between 2017 and 2020. At present, the existing output of, Mount Marion is 400000 tons / year of lithium concentrate. Based on the mining of 2.39 million tons of ore per year, it is estimated that 77.8 million tons of ore resources in Mount Marion mine can maintain production for about 30 years.

2. The source of Ningdu River

Ningdu Heyuan Mine is located in Ningdu County, Ganzhou City, Jiangxi Province, by the company's own operation and mining. The lithium resource of Ningdu Heyuan Mine is 100000 tons LCE, and the average lithium oxide content is 1.03%.

Lithium in development

(source: Ganfeng Lithium Industry, SMM)

1 Mariana

Mariana is a lithium potassium lake in the Andes of Sarta, Argentina. According to the resource assessment report prepared by Geos Mining, an Australian geological consulting firm, the reserves of lithium brine controlled and inferred by the Mariana project are about 1127 million cubic meters, and the amount of lithium resources controlled and inferred is 1866 kilotons of LCE. The Mariana project is still in the early stages of exploration, with the company owning 82.754 per cent of the Mariana project.

2 Cauchari-Olaroz

Cauchari-Olaroz is a lithium salt lake in (Jujuy), Jujuy province, northwest Argentina. The company has a 16.95 per cent stake in American lithium, which is its largest shareholder, while American lithium has a 50 per cent stake in Cauchari-Olaroz salt lake. The lithium brine resources of the Cauchari-Olaroz project are 11.8 million tons of LCE. The company has signed an underwriting agreement to underwrite 80 per cent of the actual output of the 50 per cent of the Cauchari-Olaroz salt lake project of the American lithium industry at market prices. The planned production capacity of the first phase of the Cauchari-Olaroz salt lake project is 25 kilotons of LCE, per year scheduled to be put into production by the end of 2019 or early 2020.

3 Pilgangoora

Located 120km outside Heidelan Port in Western Australia, Pilgangoora Tantalum Lithium Mine is one of the largest spodumene mines in the world. The lithium resource of the Pilgangoora tantalum-lithium mine project is 4.9 million tons of LCE, with an average lithium content of 1.25 per cent. The company, which holds a stake in Pilbara Minerals Limited4.55%, has signed a long-term underwriting agreement for the first production phase to supply 160000 tons of lithium raw materials annually for an initial period of ten years, with two five-year options. As well as the underwriting agreement for the second production phase, an additional 75000 tons of lithium raw materials are added each year. The Pilgangoora tantalum-lithium mine project is expected to go into production in the second half of 2018.

4 Avalonia

Avalonia is a spodumene mine in Ireland. The company holds a 55% stake in it. Avalonia is currently in the early stage of exploration and is unable to estimate its lithium reserves.

Since 2015, Ganfeng lithium industry has increased the distribution of lithium resources around the world, gradually ensuring the supply of upstream mines, that is, raw materials. After having sufficient resources, the company's production capacity also began to expand rapidly.

Rapid expansion of production capacity to expand global market share

According to the 2017 annual report, Ganfeng Lithium has seven major production bases for lithium compounds, metal lithium and lithium battery recycling, most of which are located in Jiangxi.

With the rapid growth of market demand for lithium products, Ganfeng lithium industry has further expanded its production capacity while building new production lines. Among them, the design capacity of lithium carbonate in 2017 increased by 9000 tons per year, or 64.3 per cent, compared with 2016.

Increase in designed production capacity: (unit: tons / year)

Detailed list of capacity expansion: (in tons / year)

According to Ganfeng lithium industry, with the continuous development of the company, it is possible to invest in new production capacity plans in the future, of which the company expects to:

The second quarter completed 20000 tons of lithium hydroxide production line, the main production of battery-grade lithium hydroxide, battery-grade lithium carbonate, production capacity of 20000 tons / year;

In the fourth quarter, a production line of 17500 tons of lithium carbonate was completed, mainly producing battery-grade lithium carbonate, with a production capacity of 17500 tons per year.

According to Guojin Securities, Ganfeng lithium industry currently has lithium carbonate capacity of 23000 tons / year, lithium hydroxide capacity of 12,000 tons / year, metal lithium capacity of 1500 tons / year, butyl lithium capacity of 500t / year, lithium fluoride capacity of 1500 tons / year. Among the company's known production capacity plans, including 20, 000 tons of lithium hydroxide production line, 17500 tons of lithium carbonate production line and 500 tons of butyl lithium production line, is expected to be fully put into production in 2019. In 2019, the company's production capacity will reach about 80,000 tons per year.

Cooperate with strong international enterprises to ensure future production and marketing

LG Chemistry is mainly engaged in petrochemistry, information electronic materials and secondary batteries. With the rise of new energy vehicles, LG Chemical has increased its investment in lithium batteries. According to the latest news from foreign media, LG Chemical has increased its battery capacity target by about 29% in 2020. From 70 gigawatt-hours of (GWh) to 90 gigawatt-hours of batteries for electric vehicles. If full production is carried out in accordance with this capacity target, the production and raw material consumption of LG chemical lithium-ion battery (LIB) will be greater than that of the entire lithium-ion battery market in 2015. The signing of the long-term contract, LG Chemical is also to be able to ensure its raw material supply chain, so with Ganfeng lithium industry hit it off.

In recent years, lithium manufacturers around the world have expanded production capacity one after another to meet the needs of the future market. How to ensure that the sales of products can be guaranteed while increasing production capacity? Ganfeng lithium industry and LG chemistry this time "hand in hand" may be able to bring some reference to the market.