[SMM Analysis] Huayu Integration Strategy reappearance and Zhiyuan contract to guarantee the supply of Palmeric Lithium Raw Materials

SMM, June 17 / PRNewswire-Asianet /-

SMM believes that the signing of the contract is an important part of the integrated development strategy of Huayu cobalt industry. The cooperation between Zhiyuan Lithium and Tianjin Bamo is conducive to ensuring the supply of raw materials to Tianjin Bamo, giving it a significant advantage in bidding for battery and car factory orders.

In May 2019, Huayu Cobalt announced the acquisition of Tianjin Bamo for 3.2 billion. Tianjin Bamo is a traditional lithium cobalt leading production plant, in the past two years in the production of ternary materials gradually. Palmer has a capacity of 12000 tons of lithium cobalt acid and a gradual expansion of ternary material capacity, which is expected to reach 63000 tons by the end of this year.

Sichuan Zhiyuan lithium industry has a capacity of 33000 tons, including 18000 tons of lithium carbonate and 15000 tons of lithium hydroxide. The current raw material uses Australian spodumene concentrate.

It is worth noting that Shengtun lithium holds a 75 per cent stake in Oino mining. The evaluation report of mining right of Oyilonggou spodumene mine shows that Yilonggou spodumene mine has 6.54 million tons of ore resources and 84500 tons of lithium oxide (1.29% of lithium oxide grade, equivalent to 208300 tons of LCE), spodumene mining scale of 405000 tons / year, mine service life of 14 years, total fixed assets investment of 530 million yuan (230 million yuan has been completed). According to the "Evaluation report on the transfer of Mining Rights of Yelonggou Lithium Polymetallic Mine in Jinchuan County, Sichuan Province", the total cost of opencast mining in Yilonggou Lithium Mine is 301.53 yuan / ton, equivalent to US $257.8 / ton of lithium concentrate (recovery rate is 80%, exchange rate is 6.8yuan / US $, the same below); the total cost of underground mining is 358.43 yuan / ton, equivalent to US $306.45 / ton of 6 per cent lithium concentrate. The mine and the company lithium salt processing plant are located in Sichuan Province, the distance is closer, the freight is lower. The Oino Yilonggou spodumene mine is expected to go into production by November 2019.

Considering that Zhiyuan Lithium had previously signed a three-year cooperation framework agreement with Arbor subsidiary Lockwood, it contracted to manufacture no less than 6875 tons, 10, 000 tons and 10, 000 tons of Arbor in 2018, 2019 and 2020. at the same time, the processing capacity in the 1920s and 1920s could reach 15000 tons in accordance with Lockwood's requirements. SMM expects that the start-up rate of the long-distance lithium industry will be guaranteed after the commissioning of the new production capacity.

Huayu cobalt industry chooses Zhiyuan lithium industry strategic partner, for Palmer, the stability of its nickel cobalt lithium raw material supply is guaranteed, more importantly, the raw material of Zhiyuan lithium industry comes from Chinese lithium mine, the raw material cost has the great advantage compared with the imported ore, the excellent cost space, in the future industry competition gradually intensifies, the industry reshuffle gradually advances in the storm, will build a broad moat for Huayu.

On June 17, 2019, SMM estimated spot prices of lithium carbonate (industrial grade), lithium carbonate (battery grade), lithium hydroxide (battery grade coarse particles), lithium carbonate (industrial grade), lithium carbonate (battery grade), lithium hydroxide (battery grade coarse particles), lithium carbonate (industrial grade), lithium carbonate (battery grade) and lithium hydroxide (battery grade coarse particles).

SMM Cobalt Lithium Research team

Hu Yan 021 51666809

Hong Lu 021 51666814

Ning Ziwei 021 51666780

Qin Jingjing 021 51666828