Keli Yuan (600478.SH) expands the mining license for its lithium-containing porcelain clay mine in Yichun, which is expected to increase the company's self-sufficiency in raw materials for lithium carbonate production.
Keli Yuan announced that its majority-owned subsidiary, Yifeng County Donglian Mineral Products Development Co., Ltd. ("Donglian Mining"), recently completed the change registration of the mining license for the Tong'an Porcelain Mine in Tong'an Township, Yifeng County ("Tong'an Mine") and obtained a new mining license issued by the Yichun Natural Resources Bureau. The production scale has been changed from 50,000 mt/year to 400,000 mt/year.
In the announcement, Keli Yuan stated that to increase the company's self-sufficiency in raw materials for lithium carbonate production, Donglian Mining applied to the Yichun Natural Resources Bureau for an expansion of the Tong'an Mine's production capacity and license renewal. The mining and processing scale has been expanded to 400,000 mt/year, corresponding to an annual production capacity of at least 10,000 mt of lithium carbonate. This is expected to enhance Donglian Mining's profitability and improve the company's self-sufficiency in raw materials for lithium carbonate production. In 2024, due to mine rectification, the actual mining volume of Tong'an Mine was relatively low, and the expansion of the mine's engineering construction from 50,000 mt/year to 400,000 mt/year requires a certain period.
Previously, Keli Yuan disclosed that the recoverable reserves of the Tong'an Mine's mining rights are 780,100 mt, with an average grade of 1.29% lithium oxide. Based on this calculation, the recoverable lithium carbonate equivalent (LCE) is 24,800 mt (780,100 * 1.29% * 2.47, where 2.47 is the conversion coefficient between lithium oxide and lithium carbonate). If no additional reserves are added, the expanded mine would only be sufficient for Keli Yuan's mining operations for less than two years.
In addition to the Tong'an Mine, Keli Yuan also owns three other lithium mines. The company has completed reserve exploration for the Tong'an Porcelain Mine and the Dangtian Porcelain Mine and is conducting detailed exploration for the E'jing Porcelain Mine and the No. 1 Porcelain Mine. According to existing detailed exploration reports and forecasts, the total ore resource reserves of the four mines are estimated to be no less than 12 million mt. Considering the high lithium content in underground mines, the total reserves of the four lithium mines are expected to be equivalent to approximately 400,000 mt of lithium carbonate.
Regarding lithium carbonate capacity, Keli Yuan disclosed that its 10,000 mt lithium carbonate capacity in Yifeng County has been put into operation. Previously, in 2022, Keli Yuan announced plans to invest in a "30,000 mt battery-grade lithium carbonate material project," a "60,000 mt high-power LFP cathode material project," and a "hybrid power technology platform project" in Yifeng County, with a total investment of no less than 3.5 billion yuan.
Keli Yuan's main business includes nickel–metal hydride batteries and related materials. In 2022, the company transitioned into the lithium battery industry and completed the upstream industry chain layout from lithium mines to lithium carbonate in 2023. Since entering the lithium battery materials sector, Keli Yuan's performance has been negatively impacted by the decline in lithium prices. In a previously disclosed response to an inquiry letter, Keli Yuan revealed that its main lithium carbonate customer transactions in 2023 exceeded 92 million yuan, with a comprehensive gross margin of -28.83%.
In the first three quarters of this year, the company's net profit attributable to shareholders was 20.57 million yuan, a YoY decrease of 19.48%. The company stated that the decline in performance was mainly due to the drop in lithium carbonate prices, which led to a YoY decrease in net profit from the lithium battery materials business, as well as a YoY reduction in investment income from associated companies.
At an investor communication event held on December 19, Keli Yuan stated that the price fluctuations in the lithium carbonate market have indeed posed certain challenges for the company. With four lithium mines and lithium carbonate production lines under its umbrella, the continued decline in lithium carbonate prices since 2024 has prevented the expected profitability of lithium carbonate products, exposing the business to the cyclical challenges of the industry. However, during this market downturn, the company has actively deployed measures, including technological innovation, cost reduction, and capacity optimization, to fully prepare for the industry's cyclical adjustments.
