LG Chemical Project Huayu Cobalt Establishment of a new company to produce lithium battery materials

[TechWeb Report] The Shanghai Stock Exchange listed company Huayu Cobalt announced that it plans to establish a joint venture with LG Chemical to produce lithium battery materials.

Name of proposed joint venture company: Huajin New Energy Materials(Quzhou) Co., Ltd.(hereinafter referred to as "Huajin Company"), Leyou New Energy Materials(Wuxi) Co., Ltd.(hereinafter referred to as "Leyou Company"). (Provisional name, subject to industrial and commercial approval. ))

Investment amount: The total investment of Huajin Company is US$ 159,000,000(equivalent to RMB 1,000,523,400) and the registered capital is US$ 159,000,000(approximately RMB 1,000,523,400). Among them, Zhejiang Huayu Cobalt Co., Ltd.(hereinafter referred to as "Company" and "Huayu Cobalt Industry"), a wholly-owned subsidiary of Zhejiang Huayu New Energy Technology Co., Ltd.(hereinafter referred to as "Huayu New Energy"), invested US$ 81,090,000, accounting for 51 % of the registered capital., LG Chemical Co., Ltd.(hereinafter referred to as "LG Chemical") invested US$ 77,910,000, accounting for 49 % of the registered capital; Leyou's total investment was US$ 475,600,000(2,992,760,560 yuan) and its registered capital was US$ 285,360,000(1,795,656,336 yuan), of which Hua You's new energy investment was US$ 139,826,400. 49 % of the registered capital, LG chemical input of 145,533,600 US dollars, accounting for 51 % of the registered capital.

Production scale

The first phase of Huagin's production scale is 40,000 tons/year ago drive. Afterwards, the two sides can expand the production scale of the joint venture company to 100,000 tons of precursor drive by consensus based on customer needs and market conditions. The scale of production may vary according to the actual operating conditions of the joint venture company.

Leyou's first-phase production scale is 40,000 tons/year positive material. Afterwards, the two sides can expand the production scale of the joint venture company to 100,000 tons of positive material by consensus based on customer needs and market conditions. The scale of production may vary according to the actual operating conditions of the joint venture company.

Huayu Cobalt said that the main products of the joint venture company are lithium-electric ternary precursors and cathode materials, and the future is mainly for the new energy vehicle power battery market and the 3C battery market. Although new energy electric vehicles have been taken as the key development direction by many countries and automotive industry enterprises in the future, there is still uncertainty about when new energy electric vehicles can be widely consumed, which may lead to major uncertainties in the demand for joint venture products.

The main products of the joint venture company are lithium electric ternary precursors and cathode materials, which mainly include non-ferrous metal elements such as nickel, cobalt, manganese, and lithium. At present, the prices of metals such as cobalt and lithium are relatively high in history, and the price of cobalt in particular has been rising. If the price of metals such as cobalt and lithium continues to rise, or if it remains at a relatively high price, it may lead downstream manufacturers to choose or develop potential technology routes with lower costs. There is a risk that lithium ternary batteries may be replaced.

Huayu Cobalt said that this joint venture with LG Chemical Co., Ltd. is a medium-and long-term development planning project based on current company development strategies, domestic and foreign market environments, and national industrial policies. In the course of implementation, there is the possibility of major changes in investment conditions, such as domestic and foreign markets, industrial policies, technology and technology, and there are various unforeseen factors or force majeure factors that may prevent joint venture projects from advancing on schedule. Or there's a risk of not meeting expectations.

LG Chemical Basic Situation

LG Chemistry was established on April 1, 2001. Scope: Basic materials business field, battery business field, information electronic materials business field, life science business field. LG is the largest shareholder of LG Chemical, with a shareholding ratio of 30.06 %.

At the end of 2017, LG chemical assets totaled 25,041,221 million won and net assets 16,338,577 million won; In 2017, it achieved sales revenue of 25,698,014 million won and net profit of 2,021,973 million won.

As of the release, Huayu Cobalt's stock price dropped 0.24 % to 117.99 yuan, with a total market value of approximately 69.936 billion yuan. (Songxing)

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