Exclusive: China's New Energy industry field trip report - Zhejiang

SHANGHAI, Mar 15 (SMM)—Recently, SMM's New Energy team organised a field trip to various cobalt smelters in Zhejiang province to have a better understanding on their production, echelon use and recycling. 

Zhejiang Huayou Cobalt Company/ Huayou New Energy Technology Company/ Zhejiang Huayou Recycling Technology Company

Founded in 2002, Huayou Cobalt is a high-tech enterprise mainly engaging in the R&D and manufacturing of new energy lithium battery materials and cobalt new materials. It started overseas resource investment in 2003 and went public in 2015.

The company’s headquarters is in Tongxiang, with overseas resource and manufacturing bases in China. It has three major business sectors—resources, non-ferrous metals and new energy. 

The company boasts the largest cobalt products capacity in the world, having an annual cobalt smelting capacity of nearly 39,000 mt (Co content). The company has an integrated industrial chain, with layouts in resource, smelting, processing, and recycling sectors.

Zhejiang Huayou Recycling Technology Company, a wholly-owned subsidiary of Zhejiang Huayou Cobalt Company, was established in March 2017. It specializes in recycling of battery scrap of new energy vehicles (NEVs). Its businesses include recycling of motive battery scrap, research and promotion of echelon reuse, harmless physical dismantling, and research and promotion of high-efficiency regeneration technology of key materials.

Jiangsu Huayou Energy Technology Company mainly engages in echelon reuse of retired lithium batteries of NEVs. 

Huayou Recycling has leading core technologies, including the patented technologies for physical harmless treatment of motive lithium battery scrap and recycling of cobalt, nickel and manganese from motive lithium battery scrap. The company uses its independent core technology to reprocess recycled battery packs/modules into echelon reuse products and apply them in fields of energy storage, low-speed electric logistics vehicles, and base station backup power, or extract cobalt, nickel, manganese, copper, and aluminium to produce precursors or cathode materials for motive batteries of NEVs. 

The company has leading recycling capacity, having the first recycling dedicated line in China with a processing capacity of 65,000 mt (battery packs) per year. It originally had "mine and recycled materials" shared production lines with processing capacity of 38,000 mt of cobalt metal (equivalent to 1 million mt of battery packs) /year.

SMM learned that the company has an independent recycling lines, and mainly recycle pole pieces and black powder. The company once cooperated with large-scale automobile and battery manufacturers to recycle high-quality battery scrap. According to Gao Weiqiao, deputy general manager of Huayou Recycling, currently nearly 90% of recycled batteries is for echelon reuse, mainly in low-speed vehicles, such as take-out electric vehicles.

SMM NE team with Gao Weiqiao, deputy general manager, Huayou Recycling (third from left) and Song Xin, SMM information consultant (first from right)

Gao Wei Qiao said that the company mainly recycles raw materials through retail orders, which is easily affected by cobalt and nickel prices. The recycling market is huge and there are many irregularities. He hoped that the government and institutes could evaluate metals content in battery scrap in order to save enterprises’ costs of testing, establishing a complete recycling system.

Zhejiang New Era Zhongneng Recycling Technology Company

Founded in 2015, the company is a shareholding enterprise of China New Era Holding Group, a state-owned enterprise. It is located in the South Wing of the "Yangtze River Delta", Zhejiang Shaoxing Hangzhou Bay Shangyu Economic and Technological Development Zone (national level), covering an area of 102 acres and currently employs more than 300 employees. It focuses on research and development of NEV motive battery materials and recycling technology, recycling, echelon reuse and sales of NEV motive batteries, recycling and technology research and development of renewable waste materials and recycling, disposal, reuse and sales of battery scrap. The company has been rated as one of the top 100 comprehensive industrial enterprises and outstanding growth-oriented enterprises by the local government many times.

Its existing production capacity stands at 10,000 mt (Co content) of cobalt salts, 2,000 mt (Ni content) of nickel salts, 1,000 mt (Li content) of lithium salts and 2,000 mt (Mn content) of manganese salts. Another 10,000 mt (Co content) of cobalt salts capacity will be added by the end of March 2022.

The "Heterogeneous Compatible Utilization and Intelligent Dismantling Technology Project of Retired Motive Battery" jointly declared by the company, Tianjin Lishen, Tsinghua University China Railway Group, and China Tower, was announced as 6.1 major project of solid waste recycling in November 2018 by the Ministry of Science and Technology. The company participated in the application of the 6.2 "Retired Ternary Lithium Battery Material Efficient and Clean Recycling Project", which was announced by the Ministry of Science and Technology in March 2020.

It has obtained 38 technical patent authorizations, including 3 invention patents, and another 7 invention patents have been accepted. It participated in the formulation of one national standard—Technical Specifications for Battery Scrap Recycling", two provincial standards of Zhejiang province— "Specifications for Dismantling and Material Sorting of Used Lithium-ion Motive Battery Units for Vehicles" and "Technical Specifications for Pollution Control of Smashing and Dismantling of Waste Lithium-ion Batteries".

SMM NE team with Zhou Yancheng, deputy general manager of New Era Zhongneng (second from left)

Zhou Yancheng introduced company's key projects to SMM, including a recycling project in Zhejiang Shaoxing that uses 100,000 mt of decommissioned lithium batteries and nickel-cobalt resources per year, a hydro-metallurgy project that uses 80,000 mt of decommissioned lithium batteries and 20,000 mt of nickel-cobalt renewable resources per year, with an annual output of 10,000 mt (Co content) of cobalt salts, 2,000 mt (Ni content) of nickel salts, 1,000 mt (Li content) of industrial-grade lithium carbonate and 2,000 mt (Mn content) of manganese salts, and a recycling project in Jiangxi Shangrao that dismantles 50,000 mt of decommissioned lithium batteries. 

Zhejiang Tianneng New Material Company

Tianneng Group is a leading enterprise in China's new energy power battery segment industry, and a world-renowned green energy system solution provider. It was founded in 1986.

Zhejiang Tianneng New Material Company is a wholly-owned subsidiary of Tianneng Holding Group. It is located in the country's first batch of ecological civilization pilot demonstration areas—Huzhou City, and mainly engages in recovery, echelon use, disposal and reuse of waste lithium-ion batteries.

The “Green Recycling & Echelon use Technology Industrialization Project of 23,000 mt of Motive Lithium Battery Scrap" is a key construction project of Tianneng Group, and a key support for the recycling transformation of the Huzhou City Industrial Resource Comprehensive Utilization Base and Changxing Economic Development Zone Park project. Kong Fanzhen, senior engineer of Tianneng New Materials, introduced the process of lithium battery scrap recycling. Deputy general manager Zhen Aigang said that the company recycles battery scrap from its own 16 recycling service outlets. 

Tianneng New Materials currently processes 23,000 mt of power battery scrap annually, with a metal recovery rate of more than 98.5%, saving about 21,000 mt of resources, including 1123 mt of cobalt, 2,802 mt of nickel, 566.1 mt of lithium and 1,579 mt of manganese. The project not only solves environmental pollution, but also reduces the waste of resources.

SMM NE team with Zheng Aigang, deputy general manager, Tianneng New Materials (second from left)

Summary

China's leading NEV makers are expanding capacities. In 2020, China's ternary precursor capacity stood at 790,000 mt, accounting for about 75% of the global market share, but the current capacity utilization rate is only 40%.

Due to overseas environmental assessment issues, the construction of precursor factories is slow, and there are relatively few overseas precursor companies. The precursor market is mainly concentrated in China. As global NEV capacities expand, demand for upstream materials will increase significantly, and it will mainly rely on the Chinese market. Therefore, precursor producers can expand in advance to better cope with the fast-developing NEV market in the future. At present, there are many precursor plants in China, and the market competition is fierce. Large-scale plants can better cooperate with downstream ternary materials producers or battery plants to meet their demand for products. While small and medium-sized enterprises that do not have funds will be phased out or reduced to foundries in the future. Only a few cobalt salts plants plan to expand cobalt sulphate lines.  

Difficult to make profit by recycling

Most of the formal enterprises engage in recycling business have upstream and downstream layouts in the industrial chain, because it is difficult to make a profit by doing recycling business alone.  Most of the raw materials directly given to recycling companies by car companies and battery plants are "new waste" in the process of experimental testing, most of which are for echelon reuse and a small part is recycled.

New business model

Echelon use: The lease model is adopted, and recycling company still retains the ownership of used batteries to facilitate the final recycling.

Recycling: Main engine factory takes back batteries and hand them over to recycling company for processing, and then the produced product is finally given to the battery factory designated by the main engine factory.

Battery swap mode: In this mode, batteries are owned by operators or main engine plants. 

Problems

Due to the imperfect recycling technology and the inconsistency of early battery models and specifications, it is difficult to disassemble different batteries together, and only one type can be disassembled at a time.

Prices update

Cobalt prices fluctuated vigorously around the Chinese New Year holiday. Trades of cobalt sulphate were active, and prices rose sharply. The average monthly price of cobalt sulphate increased by 31% in February, as overseas refined cobalt prices surged during the CNY holiday. 

But trades turned quiet last week amid falling overseas and domestic prices. As refined cobalt had larger discounts than other products, some plants suspended production of refined cobalt. Some suppliers reduced cobalt sulphate prices by 2,000-3,000 yuan/mt. SMM expects that cobalt prices will only slightly pull back considering strong downstream demand.