Describe the ambitions and anxieties of producers of raw materials for lithium batteries

In 2017, the hottest new energy vehicle industry is lithium battery, and lithium battery industry is the most dazzling cobalt.

In the field of power lithium battery, compared with other materials, ternary materials are being adopted by more and more battery manufacturers due to their comprehensive advantages in energy density, cost, safety and stability. And in the 3 yuan material such as lithium of nickel cobalt manganese acid, nickel cobalt aluminate lithium, the dosage of cobalt is in normally 1/3, because this and the demand of cobalt material increases abruptly.

Since the financial crisis, the prices of non-ferrous metals such as copper and nickel have been falling all the way. Cobalt production, a byproduct of copper and nickel, has also been affected. Although the price of non-ferrous metals such as copper has recovered since 2016, the output of mines has not increased significantly, which makes the growth of cobalt supply cannot catch up with the growth of demand, and the cobalt supply has been in a tight balance or even in short supply. Cobalt prices have also shot up, even topping 600,000 yuan a tonne earlier this year, more than triple their lows.

Affected by this, the performance of cobalt-related enterprises is also rising, one by one or even several times, the net profit is also the same; What followed was a surge in share prices, not uncommon for shares to double or even multiply. Cobalt has therefore become a sweet pastry, many enterprises competing layout.

Cobalt mining giant's calm and easy

According to the statistics of the United States geological survey (USGS), the global cobalt reserves are nearly 7 million tons, and its geographical distribution is very uneven, mainly concentrated in Congo (DRC), Australia, Cuba, the Philippines, Canada, Russia, Zambia, new caledonia and other places, accounting for about 78% of the world's total cobalt reserves. Among them, Congo's cobalt reserves are 3.4 million tons, accounting for 48% of the global cobalt reserves, ranking first in the world. However, China is a country lacking in cobalt resources, with only 80,000 tons, accounting for 1.1%.

Therefore, whoever can obtain more cobalt resources in the democratic republic of Congo will have the first chance in the cobalt resources competition, and luoyang molybdenum industry is undoubtedly the best among them.

Absolute giant: luoyang molybdenum industry

When it comes to cobalt, we have to mention two giants: one is the international giant glencore, the other is the domestic giant luoyang molybdenum industry. It took less than two years for luoyang molybdenum to become one of the world's cobalt giants, second only to glencore, thanks to two acquisitions: In May 2016, luoyang molybdenum purchased 100% of freeport-mcmorandrcholdingsltd. (FMDRC) held by PDK for $2.65 billion, thus obtaining 70% of TFHoldingsLimited (TFHL). In April 2017, luoyang molybdenum industry acquired the 30% equity of tfhlheld by LundinMiningCorporation through BHR, thereby indirectly obtaining the 24% equity of tfm. so far, luoyang molybdenum industry has indirectly held the 80% equity of tfmby.

TFM is the largest copper-cobalt mine in the democratic republic of Congo (DRC), with resources of more than 28 million tons of copper and 3 million tons of cobalt. With TFM, luoyang molybdenum obtained the cobalt resources second only to glencore. According to the financial report, luoyang molybdenum industry currently has cobalt resources equivalent to 2.328,200 tons of cobalt metal (see table 1).

In 2017, thanks to a big increase in cobalt production (see chart 2) and high prices, cobalt products became the main source of revenue for luoyang molybdenum. In 2017, luoyang molybdenum industry realized business revenue of 24.148 billion yuan, up 247.47% year on year, among which, operating revenue of copper and cobalt related products reached 13.845 billion yuan, accounting for 57.33%, an increase of 38.69 percent year on year. The gross profit of the main business reached 8.905 billion yuan, among which the gross profit of copper and cobalt products reached 5.542 billion yuan, accounting for 62.23% (see table 3). The net profit attributable to shareholders of the listed company was 2.728 billion yuan, up 173.32% year on year. It can be seen that cobalt products have become the main source of revenue and profit of luoyang molybdenum industry, which has a significant impact on the operating revenue and profit of luoyang molybdenum industry.

In 2018, the TFM copper and cobalt mine is expected to produce between 16,000 and 17,500 tonnes of cobalt, roughly the same as in 2017. Apparently, luoyang molybdenum has no plans to increase production.

Established giant: jinchuan international

Jinchuan international is a listed mineral resources development and operator in Hong Kong, the main development and operation of copper, cobalt minerals. Jinchuan international's core assets are located in the democratic republic of Congo (DRC) and Zambia. It has 4 mines with high-quality copper and cobalt, 8 mines in total, and 362,000 tons of cobalt resources (see table 4).

In 2017, jinchuan international's performance increased significantly, according to the results express. Its operating income was $549 million in 2017, up 50.5 percent from $365 million in 2016. Among them, the revenue of mineral resources reached 449 million us dollars, up 71% year on year. Cobalt saw the biggest increase, at 221%. This is mainly due to the increase in sales and prices (see table 5).

Jinchuan international currently has an annual 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 promoting diversified management and has made great achievements. In 2017, China railway's mineral resources segment achieved 4.085 billion yuan in revenue, up 65.44 percent year-on-year. The gross margin was 44.91 percent, an increase of 21.19 percentage points year-on-year (see table 6).

Easily overlooked, China railway has quietly become a force to be reckoned with in the cobalt industry. According to the financial report, as of December 31, 2017, China railway's equity cobalt resources/reserves reached 288,800 tons (see table 7).

Admittedly, China railway's resources sector is still insignificant compared to its huge size (its operating revenue reached 693 billion yuan in 2017), but its impact on the cobalt industry cannot be ignored. According to the financial report, all three of its cobalt mines have started production at designed capacity and there are no plans to expand production.

"Alternative" giant: Grimm

As a leader in the field of domestic waste battery recycling, grinmei has demonstrated the strength of different cobalt resources. Has been built according to the results, the green waste battery and power battery circulation industry chain, cobalt, nickel and tungsten resources recycling and cemented carbide industry chain, electronic waste recycling industry chain, comprehensive utilization of discarded automobiles industry chain, waste residue, waste water recycling, waste mud and so on five big industry chain, in dealing with more than three million tons of total waste, recycling cobalt, nickel, copper, tungsten, gold, silver, palladium, rhodium, germanium, 25 kinds of scarce resources such as rare earths, and super fine powder, new energy automotive power battery materials and materials, plastic wood profiles and a variety of high-tech products, formed a complete rare metal resource recycling industrial chain.

In 2017, the production and sales of gme cobalt-related products increased significantly (see table 8), so the performance of gme cobalt-related products is also outstanding. Its operating income reached 10.752 billion yuan, up by 37.22%. The total profit was 795 million yuan, up 123.47%. The net profit attributable to shareholders of the listed company reached 610 million yuan, up 131.42%. Among them, the business segment of battery materials and battery raw materials (mainly nickel sulfate, cobalt sulfate, cobalt trioxide, ternary precursor, ternary anode materials, lithium cobalt oxide, etc.) realized an operating income of 5.532 billion yuan, an increase of 166.16%, and contributed a gross profit of 1.331 billion yuan (see table 9). The business segment of cobalt-nickel-tungsten powder and cemented carbide products realized operating revenue of 2.048 billion yuan, up by 54.76%, contributing to gross profit of 490million yuan. It can be seen that the recycling and reuse of cobalt-related products have been the main source of revenue and profit of GMM.

Obviously, Grimm is not satisfied with its current achievements. It is actively building a "1+N" waste battery recycling and utilization network, and has signed agreements with more than 60 automobile companies and battery companies on the recycling and treatment of vehicle power batteries to expand its resources such as cobalt.

Ambition and anxiety among producers

Unlike the upstream cobalt mining enterprises, which calmly laid out cobalt resources and did not rush to expand production capacity, cobalt producers, while anxious about resources, actively expanded production capacity and showed their ambition and determination to grab market share and expand advantages.

Production leader: hua you cobalt industry

As one of the leading producers of cobalt products in China, the sales volume of its cobalt products in 2017 exceeded 40,000 tons (20,663 tons of metal), accounting for about 35% of domestic consumption and 18% of global consumption (see table 10). According to the financial report, in 2017, the operating revenue of hural cobalt industry reached 9.653 billion yuan, up 97.43%, among which, the revenue of cobalt products reached 7.384 billion yuan, up 121.71% (see table 11). Net profit reached 1.886 billion yuan, up by 3,145.19%. The net profit attributable to the owner of the parent company was 1.896 billion yuan, an increase of 2,637.70%. The performance was amazing.

Although hurray cobalt has started to deploy the ternary lithium battery cathode material and has achieved good results, it is clear that cobalt products are its main source of revenue and profit (see figure 1). As a result, hurray cobalt co. According to the financial report, its MIKAS construction project with an annual output of 4000t rough cobalt hydroxide and 10000t electrodeposition copper started in August 2017 has been completed at the end of the year and entered trial production. As a result, its cobalt production capacity is expected to reach 30,000 tons in 2018.

For hurray, however, the biggest uncertainty comes from its supply of cobalt. In 2017, its self-supplied cobalt ore raw materials still accounted for about 45% of the total raw material procurement in the current period, and it plans to reach 50% in 2018. But that is far from enough for a company with capacity of 30,000 tonnes. Once raw materials are not available, it will face the risk of sharp decline in performance and profits.

Rising star: cold sharp cobalt industry

Hanrui cobalt was a star on the capital markets in 2017, with its share price rising 20-fold in less than a year thanks to its stellar performance.

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

However, its cobalt product sales declined in 2017 (see table 12); Obviously, its cobalt product revenue growth is the result of benefit from the cobalt price growth.

Cobalt products account for an increasing proportion of the revenue of the hangrui cobalt industry (see figure 2). Combined with the gross margin of its products (see table 13), cobalt products are the core source of revenue and profit. Accordingly, industry of cold sharp cobalt also is increasing cobalt product capacity. In 2017, its annual output of 3,000 tons of cobalt powder production line and technical center construction project went ahead as planned. Congo maite mining co., ltd. built an annual output of 5,000 tons of electrolytic cobalt production line project, which has completed the front-end production line of 5,000 tons of cobalt hydroxide, and has been put into operation to bring benefits. The project of 20,000 tons of electrodeposited copper and 5,000 tons of cobalt hydroxide invested by hanrui cobalt industry in koluwezi is also on schedule. When these projects are completed, its cobalt capacity will increase significantly.

The biggest risk for the cobalt industry, however, is access to raw materials. According to the financial report, although it has a mine in the democratic republic of Congo, it has not started construction. Its raw materials are mainly sourced from local individuals in the democratic republic of Congo. The alleged reason is that the current production process of Congo maite can only accept more than 4% cobalt ore and more than 6% copper ore, and it does not have the capacity to process less than 3% low-grade ore, so it cannot directly use the raw ore supplied by the mine, and the processed concentrate product supplied by the market has a high cost.

And individual mining ore is selectively according to the vein to the directional drilling, mining after on-site manual sorting, so produce high ore grade, cobalt ore grade is generally ranging from 3-12%, copper ore grade in 6-20% commonly, more economic and reasonable, and conforms to the production needs, matt Congo for Congo matt and the main source of many local small and medium-sized mining enterprises.

However, the stability of the source of raw materials for individual mining is questionable, and the company seems to have experienced a shortage of raw materials: the amount of cobalt and copper ore purchased by the company decreased year by year in 2014, 2015 and 2016. In the expansion of production capacity, the purchase of raw materials has declined, except for the problem of raw material source seems to have no explanation.

The swiftness and passion of the new comer

New entrants see much more of the benefits of cobalt than the first two, acting quickly and passionately.

Prepared: pengxin resources

Originally mainly engaged in copper mining, smelting and sales, pengxin resources has gradually expanded its business to trade, finance, new materials and new energy and other fields in recent years.

At present, pengxin resources has a lot of layout in the cobalt field: its situlu copper mine in the Congo (gold) is one of the largest copper-cobalt mines in the region, with a cobalt resource of more than 180,000 tons (see table 14). In the first half of 2017, it purchased 16.17% of the shares of cleanteq, an Australian listed company, through capital increase and equity purchase, thus obtaining the rights and interests of Sunrise nickel-cobalt-scandium project. In addition, pengxin resources is also building a cobalt ore trading center and intends to reserve resources by means of mining leasing and acquisition.

In addition to resources, pengxin also actively carries out the cobalt product line construction. The phase I (3000 tons of cobalt metal/year) construction project of its cobalt hydroxide production line is being methodically promoted, and it is expected to be completed and put into production by the end of 2018. Sunrise Sunrise scandium project of CleanTeQ is carrying out preliminary research work.

Coming across the border: allied technologies

In July 2017, helongitudinal technology completed the acquisition of hunan yacheng, thus entering the cobalt industry. At present, its cobalt business is mainly completed by hunan yacheng, its main production lithium battery cathode material precursor cobalt tetroxide and so on.

As a result of the acquisition of mature companies, allied technologies shares the proceeds from the acquisition (see table 15). However, its low gross margin makes people question the motivation and rationality of its m&a.

From scratch: jubilee technologies

Compared with the well-prepared resources of pengxin and the rapid earnings of helongitudinal technology, jubilee technology is a complete newcomer, starting from scratch. At the end of 2017 and the beginning of 2018, dongguan silver jubilee cobalt industry co., LTD., Congo silver jubilee mining co., ltd. and jubilee technology (Congo) cobalt industry co., LTD. Were successively established to start cobalt business. At the beginning of 2018, jubilee technology began to carry out cobalt products trade activities, acquired cobalt mines in Congo, and prepared to set up a cobalt hydroxide smelting project with an annual output of 3,000 tons of crude metal. Everything appeared to be fast and orderly.

However, real gains for jubilee may not come until 2019.

conclusion

With the rapid development of new energy vehicle industry, the demand for cobalt will continue to grow rapidly. However, due to the copper-nickel associated characteristics of cobalt ore, its output cannot be rapidly increased in a short time. Therefore, the supply and demand of cobalt will be in a tight balance or even in short supply, and its price will also be in a high position. The situation that the existing enterprises obtain high profits and the rapid influx of the beneficiaries will continue, and the competition for cobalt resources will be more intense.

In this situation, the existing cobalt mining giants will gain the maximum benefit and have obvious investment value; Cobalt producers will also get high profits with the rapid expansion of production capacity. However, due to the lack of resource advantages and weak discourse power, they need to bear greater risks despite the investment value. New entrants may simply be catching fire with the concept.

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