Chinese battery material supplier Easpring continues to aggressively expand its production capacity and acquire resources related lithium iron phosphate, lithium manganese phosphate, and ternary (multivariate) cathode materials. On September 28, Easpring announced that it has entered into an agreement with SRBG to invest in projects related to mining and material production. Together, they will foster upstream-downstream cooperation to ensure supply stability and security for cathodes used in Li-ion batteries, precursors, and clean energy in general.
Established in 2001, Easpring was spun off from state-owned BGRIMM Technology Group and later became a major supplier for cathode materials used in Li-ion batteries. In April 2010, the company became the first Chinese cathode supplier to be listed in the domestic stock exchange.
SRBG is a core business entity of Shudao Investment Group, which is a conglomerate owned by the government of Sichuan (i.e., the Department of Transportation of Sichuan). SRBG is the first company under the provincial government to issue A shares. It has a wide-ranging business portfolio that encompasses infrastructure development (i.e., investment, design, construction, and operation and maintenance), clean energy, mining, new materials, and other related services.
The agreement between Easpring and SRBG will allow both sides to bring together their expertise and market advantages in their own fields, thereby generating in-depth collaborations across the entire supply chain for Li-ion batteries.
Regarding the partnership in the field of mining, Easpring will be acquiring stakes in existing local mining projects, while SRBG will provide the necessary support in accordance with the relevant regulatory framework. Projects where cooperation will take place include the phosphate mines in Huidong County and Mabian Yi Autonomous County. Easpring and SRGB will also collaborate extensively in the acquisition of mining rights, groundworks for mining projects, and prospecting. In these incidences, SRGB will be the majority stakeholder, whereas Easpring will be onboard as an investor.
Regarding the upstream sections of the battery supply chain, Easpring and SRBG will jointly set up new production capacity for materials such as phosphoric acid, ammonium phosphate, ferrophosphorus, ferric sulfate, and lithium salts. Collaborations may take the forms of acquisition of shares, acquisition of a controlling stake, joint venture, etc.
In principle, Easpring will be the majority stakeholder for material manufacturing projects. SRGB will be onboard as an investor, thus showing a reversal of their roles from mining projects. The projects that are they planning or discussing involve lithium iron phosphate, lithium manganese phosphate, iron phosphate, manganese phosphate, ternary (multivariate) cathodes, ternary (multivariate) precursors, etc. More concretely, both parties are at least planning to set up 300,000 tons per year of production capacity for lithium iron phosphate and 200,000 tons per year of production capacity for ternary (multivariate) cathodes.
In order to expedite the development of mining and material manufacturing projects in Sichuan, Easpring and SRBG will work together to negotiate with local governments. This will ensure that projects will be quickly approved. Also, to optimize resource allocation and minimize competition with other local participants in the supply chain, both parties have agreed to carry out investment-related collaborations through Sichuan New Li-Idea Energy Science and Technology. Specifically, this entity will handle entrusted management, capital increase, and share acquisition.
Turning to securing a stable supply of clean energy, SRBG will provide the local energy demand for the joint material manufacturing projects. This means that SRBG will set up renewable generation assets and expand the capacity of the local grid system so as to incorporate these assets. Examples include distributed generation projects and special demonstration projects. Both parties will also ensure that cathode products from their joint projects have the green electricity certificate, which offers a significant added value and a competitive advantage.
Easpring said the agreement with SRBG will strengthen the linkage between the upstream, midstream, and downstream sections of the whole industry chain. Both parties will engage in extensive, multi-aspect cooperation (i.e., resource, market, technology, and management). Easpring added that the deal will accelerate capacity expansions for ternary (multivariate) cathodes, lithium iron phosphate, and lithium manganese phosphate. In sum, the partnership fits into the company’s vertical integration strategy and is expected to improve the company’s overall competitiveness.
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.