Lithium Battery Companies Face Obstacles in Going Global! Putailai's 100,000 mt Anode Material Investment in Sweden Rejected, Appeal Planned

Putailai (603659.SH) encountered obstacles in its overseas investment as the company could not fully agree to the conditions proposed by the Swedish Inspectorate of Strategic Products. The company's planned 100,000 mt anode material project in Sweden failed to receive approval from the Swedish authorities. In response, the company stated that it would further appeal to the Swedish government.

A representative from Putailai told a reporter from Cailian Press that the company has always adhered to the principle of "fairness and mutual benefit" in conducting overseas investment activities and reasonably safeguarding its own rights and interests. As a market entity, the company has always maintained a sincere cooperative attitude and solid investment plans to advance its capacity layout globally.

Putailai announced this evening that, due to the lack of approval from the Swedish Inspectorate of Strategic Products, the company intends to terminate the implementation of the 100,000 mt integrated lithium-ion anode material production site project in Sweden. Regarding the impact of the project termination on the company to date, Putailai stated that, as the project had not yet commenced construction, it would not have a significant impact on the company's operating revenue or net profit. The project was first announced in May last year. Putailai originally planned to invest no more than SEK 15.7 billion (approximately RMB 10.398 billion as per the exchange rate on December 19) through its subsidiary Zichen Technology (Sweden) Co., Ltd. ("Sweden Zichen") to build a 100,000 mt integrated lithium-ion anode material production site to meet downstream customers' requirements for localized anode material supply.

Putailai stated that, after the project was approved by the shareholders' meeting, the company initiated and completed the filing process for outbound direct investment with relevant domestic authorities. According to Sweden's Foreign Direct Investment Screening Act, effective in 2024, the company submitted a foreign direct investment declaration to the Swedish Inspectorate of Strategic Products in February this year. The Swedish Inspectorate of Strategic Products is the designated review body under the Foreign Direct Investment Act.

Miao Qi, a senior partner at Yingke Law Firm with extensive experience in overseas commercial and intellectual property arbitration, told a reporter from Cailian Press that the Foreign Direct Investment Screening Act is a new law introduced by Sweden after many years to regulate foreign investments. According to the Act, areas such as essential services, security-sensitive services, military equipment, dual-use items, critical raw materials, metals and ores, location data or sensitive personal data, emerging technologies, and other strategically protected technologies fall under its jurisdiction. Additionally, if the Swedish Inspectorate of Strategic Products has reason to believe that the relevant investment may endanger Sweden's national security, public order, or public safety, it can proactively initiate a review of the investment.

On December 3 this year, the Swedish Inspectorate of Strategic Products proposed multiple requirements for Putailai's investment project, involving aspects such as equity control of Sweden Zichen, the composition of the management team, ownership of R&D results, and regulatory arrangements.

In response, Putailai stated in its announcement that, after careful evaluation and in-depth discussions, the company believed that these requirements posed significant challenges in terms of commercial logic and practical operations and proposed more feasible solutions. However, after further communication with the Swedish Inspectorate of Strategic Products, the project still failed to gain approval. On December 18, Putailai received a notification from the Swedish Inspectorate of Strategic Products that the investment was not approved. In light of this decision, Putailai decided to terminate the investment in the aforementioned project and plans to further appeal to the Swedish government.

The company will maintain communication with relevant Swedish government departments to explore other possibilities for advancing the project. Regarding whether overseas orders would be affected, Putailai stated in its announcement that the company would communicate with overseas customers with relevant needs to seek other medium and long-term supply solutions. Currently, the company's production sites in Jiangxi, Liyang, and Inner Mongolia have formed an anode material capacity of 150,000 mt/year, while the production site under construction in Sichuan has a capacity of 280,000 mt/year, which can meet the current capacity demands of domestic and international customers. At the same time, Putailai will continue to monitor and understand the industrial and trade policies of major countries globally. If suitable opportunities arise, the company will continue to expand its overseas capacity layout to support customers in their industry chain arrangements.