Cobalt And Lithium Enterprises Frequently Go Out To Sea For Mining, And The Upsurge Of New Energy Vehicles Gives Rise To Upstream Demand

Since this year, the sales volume of new energy vehicles at home and abroad has soared, and the market value of many new energy vehicle enterprises has reached a record high, further highlighting the value of the new energy vehicle industry chain. With the rise of new energy vehicles, ternary batteries with lithium and cobalt as the main raw materials have also made great progress.

In this case, a number of cobalt lithium enterprises have begun to block and layout in advance. On December 13, Luoyang molybdenum announced that it had reached a share purchase agreement with Freeport company to acquire 95% of the indirect interest of the latter in kisanfu copper cobalt ore in the Democratic Republic of Congo (DRC) at a total price of US $550 million; on December 8, Tianqi lithium announced that its wholly-owned subsidiary, tlea, intends to introduce strategic investors Igo, an Australian listed company, and Ganfeng lithium Co., Ltd According to a recent announcement, Ganfeng international, a wholly-owned subsidiary, will provide Exar capital with a total financial assistance of no more than 100 million US dollars, all of which will be used for the development and construction of lithium salt lake project.

On December 24, Dong miyue Yuanbin of Luoyang molybdenum said: "we believe that new energy vehicle heat will continue to increase the demand for upstream battery metal. The acquisition of kisanfu mine will further consolidate the company's leading position in the field of battery metals and enable it to play an important role in the transformation of the global energy industry. "

Fang Yutao, a researcher at Minsheng securities, said: "the growth of global power battery demand is high, and the demand is gradually rising. At present, lithium carbonate inventory has been reduced to a low level. It is expected that under the background of cost support and demand recovery, the price of lithium carbonate will continue to rise. In addition, the large-scale application of solid-state batteries will still take about 5 years. In the next 2-3 years, ternary positive batteries will still be the mainstream direction. The development directions of long-term battery include high nickel and low cobalt and high nickel and medium cobalt

Frequent sea going layout

"Ternary" is the abbreviation of Ni Co Mn or Ni co al. It can be simply understood that cobalt is the bone, which plays an indispensable role in the ternary lithium battery to ensure the stability and safety of lithium battery material structure.

According to the U.S. Geological Survey, the world's proven cobalt reserves are 7 million tons, including 3.4 million tons in Congo (DRC), accounting for 49% of the total; Australia and Cuba are also large countries of cobalt resources, accounting for 70% of the total. According to relevant data, the demand of new energy vehicles for cobalt will increase from 24500 tons in 2020 to 91600 tons in 2025, with an average annual compound growth rate of 30.18% in the next five years and 273.87% in five years.

Due to its scarcity, cobalt is the most expensive material among the three metals. Many manufacturers are committed to reducing the consumption of cobalt, but cobalt is essential to ensure the safety of batteries. As the world's second largest cobalt producer, the acquisition of kisanfu has further consolidated Luoyang molybdenum's position in the field of cobalt and electric vehicle ("EV") raw materials, and also helps to enhance China's voice over global cobalt resources.

According to public information, kisanfu is located in luarba province of the Congo (DRC). It is one of the largest and highest grade undeveloped copper cobalt ore projects in the world. Its ore resources amount to 365 million tons, copper grade is 1.72%, copper metal content is about 6.28 million tons, cobalt grade is 0.85%, and cobalt metal content is about 3.1 million tons.

As another main metal material of new energy vehicle battery, lithium is also the focus of enterprises to get stuck in advance. On December 8, Tianqi lithium also announced that tlea, a wholly-owned subsidiary, intends to introduce Igo, a listed company in Australia, as a strategic investor.

Yue Yuanbin said that it is necessary to understand the phenomenon that many enterprises are seeking opportunities in the overseas resources sector in the current rising period of bulk commodities from two aspects: "firstly, the distribution of mineral resources is uneven, copper and cobalt are relatively scarce resources in China, so Chinese mining enterprises must go out and obtain resources from the world.

Secondly, the rise of commodity prices has enhanced the driving force of enterprises to go out, but commodities have strong periodicity. Therefore, enterprises must grasp the rhythm and balance the cash flow in the process of going out in order to effectively control risks. "

However, in recent years, the importance of ESG performance in overseas acquisitions has become more and more prominent. Especially for mining and resource enterprises, environmental and community risks directly affect the operation. Therefore, whether enterprises can obtain "social license" is one of the keys to the success of overseas projects.

"Domestic enterprises have started relatively late in risk and ESG management, and have a low degree of international integration, which is detrimental to our reputation building and operational risk mitigation," said Yue. Chinese enterprises should adopt a more active and open attitude in line with international standards, strengthen communication and establish a responsible reputation, which will help us realize our aspiration on a larger stage. "

Synergetic empowerment

In fact, while increasing the distribution of overseas investment, many enterprises are also working hard to meet the high growth of this round of new energy vehicle fever. In terms of net profit growth in the previous three quarters, Huayou cobalt industry and Hanrui cobalt industry increased by 640.27% and 502.22% respectively, which has begun to show the dividend brought by the growth of downstream demand.

Therefore, cobalt lithium enterprises are also mining the potential value of the existing minerals.

The practice of Luoyang molybdenum industry is to let the acquired minerals graft on its enterprise resources, improve internal management and play a synergistic role. In Yue Yuanbin's opinion, the company's management and operation of TFM experience will also have a good reference for the development of future projects. "This project is rich in resources, has great potential, and has a variety of options. The synergy also depends on how we develop, construct and operate the project in the future."

Yue Yuanbin said: "the first is regional coordination. The project is also located in Congo (DRC). Through the operation of TFM, Luoyang molybdenum has established a harmonious relationship with the central government, local government and community of DRC; in 2016, Luoyang molybdenum acquired TFM with us $2.65 billion. With an area of more than 1500 square kilometers, the mining area is one of the highest grade copper cobalt deposits in the world, and has great prospects for resource exploration and development. In 2019, TFM will produce 177956 tons of copper and 16098 tons of cobalt. The second is variety coordination. The main metal varieties in the mining area are copper and cobalt, and Luoyang molybdenum industry has accumulated rich experience in these two varieties. Since the Chinese management team took over in April 2019, TFM business has shown new vitality. Through the improvement of management efficiency and technical improvement, the results of cost reduction and efficiency increase are remarkable. In 2019, the total cash cost has decreased by $130 million. The third is operation coordination. The two mining areas are only 33 km apart, and there are a lot of collaborative possibilities in infrastructure construction and process flow

Ganfeng lithium will bring minera Exar of Argentina into the bag in 2019, and lay out the upstream and downstream integration strategy by playing the internal industrial synergy. Minera Exar owns the cauchari olaroz lithium salt lake project located in jujujuy Province, Argentina. The average lithium concentration of the project is 592mg / L, the lithium content is 3729700 tons, and the lithium carbonate content is up to 1985.2700 tons.

Ganfeng lithium said that the company has been accelerating the commissioning progress of the cauchari olaroz lithium salt lake project, which is planned to be put into operation in 2021.

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