Lithium battery market hot cobalt giant who with the front?

In 2017, the hottest new energy car industry will be lithium batteries, while the most dazzling non-cobalt in the lithium battery industry will be.

In the power lithium battery field, compared to other materials, because of its strong comprehensive advantages in energy density, cost, safety, and stability, ternary materials are being adopted by more and more battery manufacturers; In ternary materials such as lithium nickel-cobalt manganese acid and lithium nickel-cobalt aluminate, the amount of cobalt used is usually one-third, so the demand for cobalt materials has suddenly increased.

Since the financial crisis, the prices of non-ferrous metals such as copper and nickel have been falling. As a result, many mining giants around the world have closed mines and reduced output. Cobalt production as copper, nickel and other associated minerals has also been affected. Although the prices of non-ferrous metals such as copper have recovered since 2016, mine production has not increased significantly, which has also made cobalt supply growth unable to keep up with the growth of demand and has been in a tight balance or even in short supply. Cobalt prices have also been soaring, even breaking through the high price of 600,000 yuan per ton at the beginning of this year, more than triple the low point.

Affected by this, the performance of Cobalt-related companies has also risen, they have doubled or even multiplied, and net profits are also the same; It is not uncommon for stocks to double or even double, with share prices soaring. Cobalt has thus become a hot spot, and many companies compete for layout.

The calm and calm of the cobalt giant

According to statistics from the United States Geological Survey (USGS), the global reserves of cobalt resources are nearly 7 million tons, and their geographical distribution is very uneven. They are mainly concentrated in the Democratic Republic of the Congo, Australia, Cuba, the Philippines, Canada, Russia, Zambia, New Caledonia, and other places. About 78 % of the world's total cobalt reserves; Among them, Congo's cobalt reserves are 3.4 million tons, accounting for 48,000 cobalt reserves in the world, ranking first in the world; China is a country with a shortage of cobalt resources, with only 80,000 tons, accounting for 1.1 tons.

Therefore, Luoyang Molybdenum industry is undoubtedly the leader in this battle for cobalt resources who can obtain more cobalt resources in the Democratic Republic of the Congo.

Absolute giant: Luoyang Moly Industry

When it comes to cobalt, two giants have to be mentioned: one is the international giant Glencore, and the other is the domestic giant Luoyang Molybdenum industry. As one of the world's second largest cobalt giants after Glencore, Luoyang Molybdenum has taken less than two years, all due to its two acquisitions: May 2016. Luoyang Moly Co., Ltd. acquired Freeport-McMoRanDRChildingsLtd held by PDK for US$ 2.65 billion. (FMDRC) 100 shares, thereby obtaining the equity of TFoldingsLimited(TFHL) 70 <UNK>. This acquisition allowed Luoyang Moly Industry to indirectly hold the equity of TenkeFungurumumingS. A.(TFM) 56 <UNK> in the territory of the Congo; In April 2017, Luoyang Moly Industry completed the acquisition of TFHL30 shares held by LundinMiningCorporation through BHR, thereby indirectly obtaining the interest of TFM24 <UNK>. At this point, the Luoyang Moly Industry indirectly holds the equity of TFM80 <UNK>.

TFM is the largest copper cobalt mine in the Democratic Republic of the Congo and has more than 28 million tons of copper and 3 million tons of cobalt. With TFM, Luoyang Moly obtained the second largest amount of cobalt resources after Glencore. According to financial reports, Luoyang Moly currently has a cobalt resource equivalent to 2.282 million tons of cobalt metal(see table 1).

In 2017, cobalt products became a major source of income for the Luoyang Molybdenum industry thanks to a significant increase in cobalt production(see table 2) and high prices. In 2017, Luoyang Molybdenum industry realized a business revenue of RMB 2.448 billion, an increase of 247.47 million year-on-year, of which, the operating income of copper and cobalt related products reached RMB 138.45 billion, accounting for 57.33, an increase of 38,69 percentage points year-on-year; The main business realized gross profit of 8.95 billion yuan, of which, the gross profit of copper and cobalt products reached 5.542 billion yuan, accounting for 62.23 billion(see table 3); The net profit of shareholders belonging to listed companies was 2.728 billion yuan, a year-on-year increase of 17.332 yuan. It can thus be seen that cobalt products have become the main source of income and profit for Luoyang Molybdenum industry, which has a major impact on the operating income and profits of Luoyang Molybdenum industry.

In 2018, the budgeted cobalt metal output of the TFM copper-cobalt mine was between 16,000 tons and 17.5 million tons, which is roughly the same as in 2017. Obviously, Luoyang Molybdenum industry does not have a plan to expand production.

The old giant: Jinchuan International

Jinchuan International is a mineral resources development and management company listed in Hong Kong. It mainly develops and operates copper and cobalt minerals. Jinchuan International's core assets are located in Congo and Zambia. There are 8 mines with high-quality copper and cobalt mines and 362,000 tons of cobalt metal resources(see table 4).

According to the Performance Express, in 2017, Jinchuan's international performance has grown significantly. In 2017, its operating income was $549 million, an increase of 50.5 % over 2016's $365 million; Among them, mineral resources revenue reached $449 million, an increase of 71 % year-on-year; Among them, cobalt's income increased the most, reaching 221 <UNK>. This is mainly due to the significant increase in its sales volume and sales prices(see table 5).

At present, Jinchuan International has an annual production capacity of 80,000 tons of copper and 10,000 tons of cobalt. Its cobalt production is mainly in the Ruashi mine, while the Musonoi mine is under construction and its cobalt production capacity is expected to increase significantly in the next few years.

Invisible giant: China Railway

In recent years, China Railway has been pushing for diversification and has also achieved outstanding results. In 2017, China Railway's mineral resources plate achieved revenue of 4.085 billion yuan, a year-on-year increase of 65.44 billion yuan; The gross margin was 44.91 percent, a year-on-year increase of 21.19 percentage points(see Table VI).

Although it is easy to ignore, China Railway has quietly become a non-negligible force in the cobalt industry. According to financial reports, as of December 31, 2017, China Railway's equity cobalt, metal resources/reserves reached 28.8 million tons(see table 7).

While it is true that the resources sector is still small compared to China's massive capacity($693.3 billion in revenue in 2017), its impact on the cobalt industry cannot be ignored. According to the financial report, all three cobalt mines have been put into production according to the design production capacity, and there is no plan to expand production.

"Alternative" Giant: Green America

As the leader in the field of domestic waste battery recycling, GEM has demonstrated a different strength of cobalt resources. According to the financial report, GEM has built a large cycle industrial chain of waste batteries and power batteries, cobalt-nickel-tungsten resource recovery and hard alloy industrial chain, electronic waste recycling industrial chain, scrapped automobile comprehensive utilization industrial chain, waste residue, waste sludge, wastewater recycling Utilize the five major industrial chains, such as the industrial chain, to process more than 3 million tons of waste annually, and recycle 25 kinds of scarce resources such as cobalt, nickel, copper, tungsten, gold, silver, palladium, rhodium, ruthenium and rare earth, and ultrafine powder. , a variety of high-tech products such as power battery materials and materials for new energy vehicles, plastic wood profiles, etc., formed a complete industrial chain of rare metal resource recycling.

In 2017, the production and sales of GEM-related products increased significantly (see Table 8), so its performance is also very bright. Its operating income was 10.752 billion yuan, an increase of 37.22%; total profit was 795 million yuan, an increase of 123.47%; net profit attributable to shareholders of listed companies was 610 million yuan, an increase of 131.42%. Among them, battery materials and battery raw materials business segment (mainly nickel sulfate, cobalt sulfate, cobalt trioxide, ternary precursor, ternary cathode material, lithium cobalt oxide, etc.) achieved operating income of 5.532 billion yuan, an increase of 166.16% The contribution of gross profit was 1.331 billion yuan (see Table 9); the business volume of cobalt nickel tungsten powder and cemented carbide products reached 2.548 billion yuan, an increase of 54.76%, and the gross profit contributed 490 million yuan; It can be seen that the recycling and reuse of cobalt-related products is already the main source of GEM revenue and profits.

GEM is obviously not satisfied with the existing achievements. It is actively constructing a “1+N” waste battery recycling network. It has signed a recycling agreement for vehicle power batteries with more than 60 car companies and battery companies to expand its sources of cobalt and other resources. channel.

Producer's ambition and anxiety

Unlike the upstream cobalt mines, which are calmly deploying cobalt resources and not rushing to expand production capacity, cobalt producers are actively expanding their production capacity while expressing their ambition and determination to seize market share and expand their advantages.

Production leader: Huayu Cobalt Industry

Huayu Cobalt is one of the leading producers of cobalt products in China. Its sales of cobalt products in 2017 exceeded 40,000 tons(20,663 tons of metal), accounting for about 35 tons of domestic consumption and 18 tons of global consumption(see table 10). According to the financial report, in 2017, Huayu Cobalt achieved operating income of 9.653 billion yuan, an increase of 9.743 billion yuan, of which, cobalt products realized revenue of 7.384 billion yuan, an increase of 121.71 billion yuan(see table 11); The net profit was 1,88.6 billion yuan, an increase of 3,145.19 yuan; The net profit attributed to the parent company owner was 1.896 billion yuan, an increase of 263.70 billion yuan, and the performance was very impressive.

Although Huayu cobalt has already begun to lay out the positive materials for the three-element lithium battery and has achieved good results, it is clear that cobalt products are its main source of income and profit(see figure I). Therefore, Huayu Cobalt industry spared no effort to expand its cobalt production capacity. According to the financial report, the construction of MIKAS, which was launched in August 2017, with an annual output of 4000t crude cobalt hydroxide and 10000t Electrowinning copper project, was completed at the end of the year and entered trial production; As a result, its cobalt production capacity in 2018 is expected to reach 30,000 tons.

However, the biggest uncertainty for Huayu Cobalt comes from the supply of raw materials for its cobalt mines. Although, in 2017, its self-supplied cobalt ore raw materials still accounted for about 45 % of the total amount of raw materials purchased during the current period, and it plans to reach 50 in 2018; But that is not enough for a company with 30,000 tons of capacity. If raw materials are not available, it risks a sharp decline in performance and profits.

Rising Show: Han Rui Cobalt Industry

Cold cobalt, a star in the capital markets in 2017, has seen its share price grow 20-fold in less than a year, thanks to its impressive performance.

In 2017, the company achieved revenue of 1.465 billion yuan, a year-on-year increase of 97.16 billion yuan; The net profit attributed to the parent company was 449 million yuan, a year-on-year increase of 575.04. Compared with the same period of last year, cobalt powder sales revenue increased by 110.42 % year-on-year, electrolytic copper sales revenue increased by 54.56 % year-on-year, cobalt concentrate products sales revenue increased by 123.64 % year-on-year, and cobalt hydroxide products sales revenue increased by 152.32 % year-on-year.

However, sales of its cobalt products declined in 2017(see table 12); It is clear that the substantial increase in revenue from its cobalt products was the result of a substantial increase in cobalt prices.

Cobalt products account for an increasing proportion of the revenue composition of the cold cobalt industry(see figure II). When combined with the gross margins of its products(see Table XIII), cobalt products are a core source of income and profits. Therefore, the cold cobalt industry is also adding cobalt product production capacity. In 2017, its annual production line and technology center construction project of 3,000 tons of metal cobalt powder per year progressed smoothly as planned. The Congo Maite Mining Co., Ltd. has built an annual production line of 5,000 tons of electrolytic cobalt, and has completed the production line of 5,000 tons of metal cobalt hydroxide in the front end., and has already put into operation to bring benefits; The project of investing 20,000 tons of electrodeposited copper and 5,000 tons of cobalt hydroxide in Kolwezi is also progressing as planned. Upon completion of these projects, their cobalt production capacity will increase significantly.

However, for the cold cobalt industry, the biggest risk lies in the acquisition of raw materials. According to the financial report, although it has a mine in the Democratic Republic of the Congo, it has not started construction; Its raw materials are mainly purchased from local individuals in the Democratic Republic of the Congo. The claimed reason is that the current production process of Congo Mate can only accept more than 4 cobalt ores and 6 copper ores, and it does not have the ability to handle low-grade ores below 3, so it can not directly use the original ore supplied by the mine, the cost of processed concentrate products supplied on the market is higher.

The ore mined by individuals is selectively oriented according to the vein, and manual separation is carried out on the site after mining. Therefore, the production of ore has a high grade, cobalt ore grade varies from 3-12, and copper ore grade is generally 6-20 <UNK>, More economical and reasonable, and in line with the production needs of Congo's Mate, it is the main source of Congo's Mate and many local small and medium-sized mining companies.

However, the stability of the source of raw materials for individual mining is questionable, and the company seems to have encountered difficulties in the supply of raw materials: the company's purchase of cobalt and copper ore has declined year by year in 2014, 2015 and 2016. As production capacity expands, raw material purchases fall, and there seems to be no explanation other than the source of raw materials.

The quickness and passion of the new entrants

Compared with the first two, newcomers see the cobalt industry's huge profits, acting quickly and full of passion.

Prepared: Peng Xin Resources

Peng Xin Resources was originally engaged in the selection, smelting, and sales of metal copper. In recent years, it has gradually expanded its business to trade, finance, new materials, and new energy.

At present, Pengxin Resources has a lot of layout in the cobalt minefield: Its Situlu Copper Mine in the Congo is one of the largest copper-cobalt mines in the region, with cobalt resources of more than 180,000 tons(see table 14); In the first half of 2017, it subscribed for the shares of the Australian listed company CLeanTe Q16.17 through capital increase and shares, thus obtaining the interest of the Sunrise Nickel Cobalt Satium Project; In addition, Pengxin Resources is still building a cobalt ore trading center and plans to reserve resources through mining leasing and acquisition.

In addition to resources, Peng Xin Resources has also actively carried out the construction of the cobalt product line. The construction project of the first phase of the cobalt hydroxide production line (3000 tons of cobalt metalloids per year) is being systematically advanced and is expected to be completed and put into operation by the end of 2018; CleanTeQ's Sunrise Nickel Cobalt Project is carrying out research work in the early stages.

Cross-border: technology integration

In July 2017, the joint technology completed the merger and acquisition of Yacheng, Hunan, thus cutting into the cobalt industry. At present, its cobalt business is mainly completed by Yacheng, Hunan Province. Its main production of lithium battery positive electrode material precursor cobalt tetroxide and so on.

As a result of acquisitions of mature companies, profits were shared after mergers and acquisitions (see table 15). However, its partial low gross profit rate cannot help but question the motives and rationality of its mergers and acquisitions.

Starting from Zero: Jubilee Technology

Compared with the rapid return of Peng Xin's resources and the combined technology, Jubilee Technology is a thorough newcomer, and everything begins from scratch. At the end of 2017 and early 2018, Dongguan Silver Cobalt Co., Ltd., Congo Jubilee Mining Co., Ltd. and Jubilee Technology (Congo) Cobalt Co., Ltd. were established to start cobalt business. At the beginning of 2018, Jubilee Technology began trading activities for cobalt products, acquiring Congo's gold cobalt mine, and preparing an annual production of 3,000 tons of crude cobalt hydroxide smelting projects in Jinjianli, Congo. Everything appeared to be rapid and orderly.

However, jubilee technology is likely to have 2019 left if it wants real revenue.

With the rapid development of the new energy automotive industry, the demand for cobalt will continue to grow rapidly, and due to the characteristics of copper and nickel in cobalt ore, its output can not increase rapidly in a short period of time; Therefore, the supply and demand of cobalt will be in a tight balance or even in short supply. Its price will also be high. The situation where existing companies receive high profits and the rapid influx of distributors will continue. The battle for cobalt resources will be even more fierce.

In this situation, the existing cobalt mining giants will gain the greatest benefit and have obvious investment value; Cobalt producers will also gain high returns with the rapid expansion of production capacity. However, due to the lack of resource advantages and weak voice, although there is investment value, they need to take greater risks. Newcomers are more likely to get a kick out of the concept.

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