There is "lithium", or grab "lithium"

December 21, 2021
     In 2021, which is about to end, "Lithium travels all over the world" was once regarded as the "bible for getting rich" by investors. With the full explosion of new energy vehicle sales, lithium, the main metal raw material for power batteries, can be regarded as one of the absolute hot spots in the new energy vehicle industry. In 2022, Junfeng Motors will continue the trend of the previous year.

As a limited resource, mining giants pride themselves on "lithium". They have transformed from ordinary resource stocks into doubling prices. The companies that once borrowed and gambled that led to financial crises have become "pioneers" in this round of hoarding mines. .

As for the supply chain crisis that has emerged after the epidemic, lithium is not only a "good heart" for upstream companies, but also power battery manufacturers have joined the battle for lithium. These leaders have started the global hoarding model, and even took the lead for lithium. "Break the blood", the industry also spread the rhetoric of "getting the upper reaches the world".

   With all parties rushing for mines, the price of lithium concentrate has risen, and the price of lithium salt has also soared by 2-3 times this year. Power battery manufacturers have to announce price increases to balance the increase in costs.

   As a participant of new energy vehicles, Junfeng Company pays great attention to the cause of "lithium" because it does not allow people to use "lithium". It must take precautions and seize the strategic commanding heights.


   grab the mine and attract the eye

   Towards the end of the year, "Lithium Electric Mao" Ganfeng Lithium Industry and "Ningwang" Ningde Times also staged an "annual grand offering" for grabbing lithium mining enterprises.

In mid-November, with an announcement issued by Lithium Americas Corp, the final destination of Millennial Lithium, headquartered in Vancouver, Canada, was determined. This 5-month giant The battle for lithium mines finally came to an end.

Lithium Americas announced that it has agreed to acquire Millennium Lithium at a price of US$400 million. This is already the third quotation for Millennium Lithium. This price is about 34% higher than the previous US$299 million quotation of CATL. The price quoted by Ganfeng Lithium is nearly 43% higher than earlier.

   More interestingly, although American Lithium is a Canadian resource company like Millennium Lithium, it is inextricably linked to Ganfeng Lithium.

This battle can be started as early as Ganfeng Lithium first took a fancy to Millennium Lithium in July this year, and then it proposed to Qianxi Lithium at a consideration of US$2.85 per share and a transaction value of not more than approximately US$280 million. Takeover offer.

However, at the end of September this year, CATL took over the millennial lithium industry from Ganfeng Lithium Industry, and increased its quotation from approximately US$280 million by Ganfeng Lithium to approximately US$299 million. At the same time, the CATL should also offer Jiangxi Feng Li Industry paid US$10 million in liquidated damages.

Just when the industry believed that the development of the matter was over, on November 17th, American Lithium further increased its offer to 400 million U.S. dollars, and agreed to pay 20 million U.S. dollars in liquidated damages to CATL, and finally won the Millennium Lithium Industry .

   In fact, behind the American lithium industry’s price increase is that the company is still at a loss and its financial situation is not “rich”, or even “stretched”.

   and found out that there is still a figure of Ganfeng Lithium behind the American lithium industry. According to the semi-annual report of Ganfeng Lithium, the company indirectly holds 12.51% of the shares of Lithium Americas, and it also dispatched a director to Lithium Americas, which has a significant impact on the latter's operations.

  Ganfeng Lithium and American Lithium also have cooperation on the project. Both parties jointly own the Cauchari-Olaroz lithium salt lake project in Argentina. In addition, there are also a lot of financial lending between the two parties, and Ganfeng Lithium is usually "borrowing money" to Lithium America.

  Therefore, some analysis pointed out that the battle between the two giants for overseas lithium mines still ended with the victory of Ganfeng Lithium.

  Why do the two giants in the lithium battery industry do not hesitate to fight for the millennium lithium industry? This is mainly because Millennium Lithium "has mines at home."

According to public information, Millennium Lithium is mainly engaged in the acquisition, exploration and development of lithium mining rights. The company has two salt lake projects to be developed or explored in Argentina, namely the Pastos Grandes lithium salt lake project and the Cauchari East lithium salt lake project. With approximately 4.12 million tons of lithium carbonate equivalent (LCE), the latter is still in the early stages of exploration.

   And this looting case is just a microcosm of the overseas stockpiling of major domestic companies this year.

   In early October this year, Zijin Mining also spent nearly 5 billion yuan to win the Canadian New Lithium Company from the Ningde era.

Many upstream and downstream lithium battery industries, such as Tianqi Lithium, Ganfeng Lithium, Ningde Times, and Mount Everest in Tibet, have deployed overseas lithium mines earlier. This year, more companies flocked to them, and their shots became more generous. There is a situation of "grabbing food from the tiger's mouth".

     Many models of Dongfeng Junfeng use Ningde Times batteries. Dongfeng and Ningde Times have established a "Dongfeng Times" battery company. For this reason, Junfeng's new energy vehicles are naturally "lithium" and "being" grabbed.

   In addition to the lithium battery industry, many cross-border companies have also taken a fancy to the "lithium" piece of fat, and have followed up this year. According to the data of high-tech lithium battery, since the second half of this year, there have been more than 20 companies that have cross-border deployment of lithium batteries, including listed companies including Jinyuan shares and Anzhong shares.


   Scramble under the skyrocketing demand

   "Demand is growing too fast, and supply must keep up." In response to the phenomenon of domestic companies rushing to mine overseas, Cui Dongshu, secretary-general of the National Passenger Car Market Information Joint Council (CIC), told a reporter from the International Finance News.

   With the soaring sales of new energy vehicles, the demand for the entire lithium battery industry chain is rising simultaneously, and lithium concentrate is the upstream raw material for power batteries.

      Since the beginning of this year, what is different from the downturn of traditional fuel vehicles is that the sales of new energy vehicles have soared. In November this year, the wholesale sales of new energy passenger vehicles reached 429,000, an increase of 17.9% month-on-month and a year-on-year increase of 131.7%; in the first 11 months, the wholesale sales of new energy passenger vehicles was 2.807 million, an increase of 190.2% year-on-year.

   In November, the wholesale penetration rate of new energy vehicle manufacturers was 19.9%, and the penetration rate from January to November was 15%, which is also significantly higher than the 5.8% penetration rate in 2020.

   In the context of the continued increase in sales of new energy vehicles, as the end of the year is approaching, many automakers have been complained by consumers due to lack of batteries and cannot deliver their cars, and staged a rights defense farce.

   Just a few days ago, many new energy vehicles of Dongfeng and Junfeng were out of stock, which was caused by the extreme shortage of battery supply.

    On the other hand, Zeng Yuqun, the chairman of the Ningde era, also frankly confessed at the shareholders' meeting that he was "almost unbearable" because of the frequent urging of customers recently.

   As the supply of power batteries continues to be tight, the price of lithium carbonate, a midstream material, has also skyrocketed this year (especially in the second half of the year).

   In the third quarter of this year, the price of lithium salt, led by battery-grade lithium carbonate, rose rapidly, and continued to rise even after breaking through 200,000 yuan/ton. Public data shows that as of December 13, the average spot price of domestic battery-grade lithium carbonate was 223,000 yuan/ton, an increase of 320.75% from the beginning of the year.   In addition, Guoxuan High-Tech and Penghui Energy’s power battery price hikes are also similar to each other. Penghui Energy claims that as the rising trend of raw materials continues, its cost pressure "has far exceeded the tolerance limit."

Obviously, upstream raw materials have become one of the restrictive links in the development of new energy vehicles, so the lithium battery industry has slowly formed a unified consciousness of "who controls a stable supply of raw materials, who has the right to speak in the market", so whether it is minerals Companies or battery companies are not hesitating to scalp and grab mines.


   heavily dependent on imports

   Compared to domestic, why did Chinese companies hoarding and grabbing lithium ore overseas have become a phenomenon this year?

   This aspect is related to the total amount and type of lithium resources in my country. Although my country's lithium resources rank high in the world, the total proportion is not large, and more than 80% of them are in the form of salt lakes, which can be refined through complicated processes.

According to USGS data from the United States Geological Survey, as of the end of 2020, the global lithium resources are about 86 million tons, of which the sum of the lithium resources in the "lithium triangle" region of South America (the high-altitude lakes and salt marshes at the junction of Chile, Argentina and Bolivia) It accounts for nearly 60% of the total global lithium resources, followed by the United States, Australia, and China. Australia has 6.3 million tons of lithium resources and most of them are hard rock lithium mines. It is the world’s largest export of hard rock lithium mines. country.

   While my country's lithium resource reserves only account for 6% of the global lithium resource reserves, in contrast, my country's new energy vehicle production and sales are leading the world. According to data released by the Federation of Passengers, China’s new energy vehicles accounted for 51% of the world’s share in the first 10 months of this year, of which up to 61% in October.

  The huge gap makes my country heavily dependent on imports in terms of lithium resources, accounting for about 80% of the total.

   Therefore, many downstream battery companies will choose to purchase lithium mines overseas. While ensuring the safety of the supply chain, they can also better control the cost of raw materials and gain more competitiveness in the industry.

Public data shows that the global lithium resources are mainly in the hands of several giants, and the industry concentration is very high. The production capacity is mainly composed of American Albemarle (ALB), American Formica, Australia Talison (51% equity in Tianqi Lithium, Ya Bao 49%) and Chile's mining and chemical SQM (Tianqi Lithium 25%) have four monopolies, accounting for approximately 90% of the global production capacity.

   "Let's grab more mines, it's not a bad thing." Cui Dongshu told reporters. This is due to the fact that as far as current technology is concerned, lithium is the "hard currency" of the new energy industry, and its position in the "energy revolution" can be said to be very important. Just like enterprises, after my country has mastered the upstream resources, it can also hold an important voice in the new energy industry supply chain.

  Currently, the global lithium mine layouts of Chinese companies are Australia, Argentina, Canada, Congo, Ireland, etc.

   Under the multiple layouts, the Huachuang Securities Research Report shows that the production of spodumene/lepidolite of Chinese enterprises this year is expected to account for 20% of the total global production, and the proportion will rise to 26.6% and 36.5% in 2022 and 2023 respectively. By 2025, the above-mentioned proportion will drop to 8%, but this is mainly due to the increase in spodumene from Australia's Talison, which is controlled by my country's Tianqi Lithium.


   In the short term, there will still be a supply gap, and take advantage of the “dongfeng” to seize the commanding heights of new energy vehicles

   Is this kind of fanatical sharing of global lithium mines sustainable?

   But most experts pointed out that in the next few years, the gap in lithium resources will still exist, and the price of lithium concentrate will continue to rise.

  According to agency forecasts, affected by demand, this round of lithium prices may usher in a major price cycle. In the second half of 2019, due to the continued decline in lithium prices, many Australian lithium concentrate production companies experienced financial crisis and went bankrupt and stopped production. It is estimated that the newly added lithium concentrate production capacity from 2021 to 2022 is extremely limited, and there will be an inflection point in 2023. The contradiction of tight supply of lithium concentrate is expected to continue until 2022.

   Based on the long-term existence of the gap, it does not rule out the possibility that the price of lithium concentrate will rise to US$2,300/ton in the future. This also means that the price of lithium concentrate still has 15% room to rise. Of course, this is no longer the same as the increase of over 3 times this year. Cui Dongshu pointed out to reporters that even if there is still room for growth, companies still need to invest rationally, and beware of the sudden drop in prices after the increase in resource supply, which "may die a lot" by then.

   In addition to the return of supply and demand to rationality, many power battery companies are also trying to get rid of the restriction of "lithium". At the end of July this year, CATL released the first-generation sodium-ion battery that once detonated the market. One of the important reasons is that compared with lithium, sodium is prevalent in nature, about 1,000 times that of lithium.

According to reports, the first-generation sodium-ion battery cell energy density of CATL is 160wh/kg, which is slightly lower than that of lithium iron phosphate batteries. However, CATL said that the energy density of the next-generation sodium-ion battery cell will exceed 200wh/kg, which is expected to be 2023. A basic industrial chain was formed in the year.

        Dongfeng's new energy vehicles will continue to use batteries from the Ningde era to continuously increase the energy density of the entire vehicle battery pack.

       There is "lithium" in the hand, so I don't panic. Junfeng Motor has "lithium" first, so why not fear others will grab "lithium" later.

       Whoever has "lithium" decides the world!