"The company is advancing the 'Construction Project of High-Grade Lithium Battery New Energy Materials Production Line (Phase III)' at Ya'an Lithium Industry. In 2024, it completed the construction and commissioning of a 30,000 mt lithium carbonate production line. Currently, it is constructing a 30,000 mt lithium hydroxide production line, and it is expected that by the end of 2025, the company's comprehensive lithium chemicals capacity will reach nearly 130,000 mt." This was recently disclosed by Yahua Group during a survey conducted by investment institutions.
According to reports, Yahua Group's lithium chemicals customers primarily sign long-term agreements. Internationally, these include enterprises such as TESLA, LGES, LGC, SK On, and Panasonic, while domestically, they include CATL, Zhenhua, Xiamen Tungsten, Reshine, and Minmetals New Energy. As of 2024, revenue from Yahua Group's top customers accounted for 90% of its total. Currently, a significant portion of the company's orders still come from international customers.
Yahua Group stated that the construction of its lithium chemicals production lines aligns with the future demand of its long-term contract customers, facilitating the full release of its future lithium chemicals capacity.
China Battery News noted that Yahua Group announced on May 13 that its wholly-owned subsidiary, Yahua International, had signed a "Deed of Settlement, Termination, and Release" with Lithium Developments (Grants NT) Pty Ltd (hereinafter referred to as "Lithium Developments"), a wholly-owned subsidiary of Core Lithium Ltd (hereinafter referred to as "Core"). As part of the settlement agreement, Core agreed to pay Yahua International a settlement fee of US$2 million.
The signing of this termination agreement was based on the actual production and operational status of Core's Finniss lithium mine, which is expected to be unable to supply lithium concentrates to Yahua International in the short term. After friendly consultations between the two parties, it was decided to terminate the original "Offtake Agreement" and supplementary agreement for lithium concentrates. Yahua Group stated that the termination of this agreement would not impact the company's lithium resource security. The company has already established a diversified channel layout combining self-controlled mines and externally purchased mines, constructing a stable lithium resource security system capable of meeting the production needs of its lithium chemicals capacity.
In terms of self-controlled mines, Yahua Group's Phase I and Phase II projects at the Kamativi lithium mine in Zimbabwe were fully completed in 2024, currently achieving an annual raw ore processing capacity of 2.3 million mt. Products have been successively shipped back to China for production. Additionally, the company has obtained priority supply rights by acquiring a stake in the Lijiagou lithium mine in Sichuan.
Regarding externally purchased mines, Yahua Group has secured offtake rights for lithium mines through long-term agreements with resources such as Pilbara in Australia, DMCC in Africa, and Atlas in Brazil.
Over the past few years, the price of lithium carbonate has fluctuated sharply, disrupting the entire lithium battery industry chain. The price of lithium carbonate surged to approximately 600,000 yuan/mt in 2022 but has since plummeted to around 60,000 yuan/mt, marking a 90% decline.
Yahua Group stated that in 2024, the company hedged some of the risks caused by price fluctuations in lithium chemical products through lithium carbonate futures hedging. In the future, the company will carry out hedging business at an appropriate time based on its production and operation plans, as well as the price situation of lithium carbonate futures, in order to mitigate the potential impact of severe price fluctuations in finished products and raw material markets on the company's operations.
