Lizhong Group: plans to invest 1.2 billion yuan to build new energy lithium electricity new materials project

300428.SZ announced that the company held the 15th meeting of the fourth session of the Board of Directors and the 13th meeting of the fourth Board of Supervisors respectively on July 30, 2021 to examine and approve the "proposal on Investment in the Construction of New Energy Lithium Power New Materials Project", agreeing that the company should use self-raised funds to invest in the construction of new energy lithium electricity new materials project, with a total investment of RMB 1.2 billion, located in Jining New Materials Industrial Park. The project is divided into two phases, the first phase is from November 2021 to March 2023, and the second phase is from April 2023 to August 2024.

Construction content:

According to the announcement, the construction of the project meets the needs of the company's strategic development:

The company is a leading enterprise in the functional master alloy new material industry, the aluminum-based functional intermediate alloy products produced by the company, especially high-end grain refiners, metal purification, fluxes and other products have a great demand for potassium fluoroborate, potassium fluorotitanate and other fluoride raw materials every year. Due to the uneven quality of the above-mentioned raw materials in the domestic market, in order to ensure the quality and supply of the company's key raw materials, and to further promote the extension of the upstream and downstream industrial chain, the company will rely on the customer and market resources accumulated in the field of new energy vehicles and new materials over the past 30 years, by hiring a team of industry technical experts with rich experience in this project. Relying on its mature and stable process technology and rich production management experience, we have invested in the construction of new energy lithium electricity new materials project of Lizhong Group.

The lithium hexafluorophosphate and lithium difluorosulfonimide products produced by this project can alleviate the shortage of lithium battery materials for customers of new energy vehicles. At the same time, the by-products produced by lithium hexafluorophosphate and lithium difluorosulfonimide products are water hydrofluoric acid through neutralization replacement, which can synthesize inorganic fluoride products, the key raw materials of functional master alloys, thus effectively ensuring the stability of the product quality of the company. At the same time, the fluoride products produced by this project match the raw material demand of the company, which can ensure the supply of key raw materials of the company.

This project can realize the diversified industrial layout of the company:

The arrival of the era of carbon neutralization promotes the innovative development of new energy technology, and the company is committed to the extension and development of the new energy vehicle industry chain. This project will further promote the company's market layout in the field of lithium battery materials for new energy vehicles and enrich the company's product range in the field of new energy vehicles and new materials. At the same time, with the in-depth research and exploration of new energy vehicle power battery, sodium ion battery will become a new development direction of energy storage battery and power battery, and the fluorinated na (electronic grade) capacity to be invested by the company will be used as the technical storage and distribution of sodium ion battery material end to realize the diversified industrial layout of the company.

The market prospect of the project is broad:

According to the China Association of Automobile Manufacturers, a total of 938000 new energy vehicles were sold in China from January to May in 2021, an increase of 224.2% over the same period last year. In May 2021, China's power battery production totaled 13.8 GWH, an increase of 165.8 percent over the same period last year and 6.7 percent month-on-month. As an important part of new energy vehicles, the market demand for power batteries also keeps growing.

Lithium battery is mainly used in three fields: consumer battery, power battery and energy storage battery. At present, consumer batteries are mainly used in mobile phones, notebooks and other 3C products. As the development of this field has entered a mature and stable stage, it is expected to grow at a moderate rate of 10% every year. Power batteries benefit from the rapid growth of new energy vehicles, energy storage batteries benefit from wind power generation and the development of microgrid will become an important driving force for the growth of lithium batteries. According to data released by the Consumer goods Industry Department of the Ministry of Industry and Information Technology, the cumulative output of lithium-ion batteries in China from January to April in 2021 reached 6.71 billion, an increase of 62.6 percent over the same period last year.

Lithium battery industry has a huge market demand and good development prospects. Lithium hexafluorophosphate is used as the main raw material for both lithium iron phosphate battery and ternary lithium battery. Due to the rapid growth of downstream lithium battery demand, lithium hexafluorophosphate is the most important part of electrolyte cost. Due to the mismatch between supply and demand and high production technical barriers, its sales price and market demand continue to rise. Therefore, the future development prospect of this project is broad.

The impact of this project investment on the company:

Under the call of the rapid development of new energy vehicles and the national call of "carbon peak, carbon neutralization", the company actively lays out the extension and development of new energy vehicle industry chain. The company invests in the construction of this project, first of all, it will make full use of the by-products produced by the project to solve the quality and supply guarantee problems of the company's key raw materials, so that the company's industrial chain will be further extended; secondly, the project will further enrich the company's product types in the field of lithium battery materials for new energy vehicles, and at the same time increase the company's technical storage and distribution of sodium ion battery materials to help the company achieve diversified industrial layout. Finally, with the increase in sales of new energy vehicles, the market demand for lithium hexafluorophosphate, lithium difluorosulfonimide and other new energy lithium battery materials is growing rapidly, and the construction of this project will alleviate the current shortage of supply in some markets. further enhance the company's profitability and comprehensive competitiveness to achieve large-scale and beneficial development of the company.