Shanshan to Raise Funds for Adding 300,000 Tons per Year of Production Capacity for Anode Materials

Shanshan (also known as Shanshan Group or Shanshan Corporation), a major Chinese suppliers for battery materials, has been receiving a large flow of orders as the boom in the market for new energy solutions continues. In order to capture more of the growing demand, Shanshan is aggressively building up production capacity for anode materials. On October 17, Shanshan released a notice announcing that it will be raising no more than RMB 6 billion for capacity expansion activities and maintaining liquidity. Of this amount, RMB 4.2 billion will be used to build the first phase of an integrated manufacturing base. The remaining RMB 1.8 billion will be used to supplement the company’s circulating capital.

The integrated manufacturing base is located in the Anning Industrial Park of Kunming, the capital of China’s Yunnan Province. The total investment in the first phase is planned at RMB 7.927 billion. Once completed, the first phase will have a production capacity of 200,000 tons per year for anode materials. The development of the base is being implemented through Shanshan’s subsidiary Yunnan Shanshan New Materials.

The base will comprise facilities for grinding materials, low-temperature phase transitioning, preparatory processing, graphitization, and carbonization. Hence, the base will achieve a very high degree of vertical integration with respect to processing and production.

Shanshan will raise funds through private offerings. The company stated that the market for NEVs is growing rapidly, thus leading to a massive expansion of the demand for anode materials used in Li-ion batteries. Currently, the company is a experiencing a capacity crunch for anode materials as it struggles to meet the burgeoning market demand.

Presently (or as of the date of the notice), Shanshan’s effective production capacity for finished anode products has come to 180,000 tons per year. However, Shanshan’s in-house graphitization capacity has come to 9,400 tons per year. Hence, there is a huge disparity between the company’s anode production capacity and graphitization capacity. To compensate for the imbalance, Shanshan has outsourced a large share of graphitization. However, outsourcing raises costs and causes inconsistency in product quality. These shortcomings, in turn, affect production and shipments.

In its notice, Shanshan said the latest round of fundraising will enlarge the scale of the company’s vertical integration efforts and raise the self-sufficiency rate for graphitization. Not only will the company gain a greater economies of scale, it will also have a larger and more stable output for anode products. All of these will benefit the company in terms of core competitiveness.

It is worth mentioning that the RMB 6 billion fundraising round comes just about half-a-year after the previous RMB 3 billion fundraising round. In other words, Shanshan has increased its capital by an excess of RMB 9 billion within these six months.

Earlier on April 19, Shanshan disclosed that four strategic investors and its wholly-owned subsidiary Ningbo Shanshan New Energy had injected capital into another one of its subsidiaries – Shanghai Shanshan Lithium Battery Materials Technology. The strategic investors were BYD, ATL, Wending Investment, and Kunlun Fund. At that time, Shanshan said the strategic investors were the key suppliers and customers in the upstream and downstream sections of the supply chain for anode materials. Shanshan intends to deepen its strategic partnerships with these companies in order to create mutual benefits, support the development of its anode products, and enhance its core competitiveness. The capital injection came to a total of RMB 3.05 billion.

CATL is the backer of Wending Investment and a major client of Shanshan’s anode business along with BYD. The parent of Kunlun Fund is CNPC, which has been supplying Shanshan with the upstream materials that are used to make anode products.

Shanshan’s Latest Fundraising Round (Unit: RMB Million)

This article is a translation of a Chinese article posted by TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.