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BYD Places Another 4 Billion Order!

Industry information
2022/05/24 10:00

On May 19, BYD (002594) announced that the company's board of directors passed a resolution agreeing that the company and its holding subsidiaries will purchase from the newly added related party Shengxin Lithium Energy and entrust the processing of lithium products. The estimated amount of daily connected transactions in 2022 is 4 billion yuan, and agreed Authorize the management of the company to handle relevant procedures.


According to the data, Shengxin Lithium Energy was listed on the Shenzhen Stock Exchange in 2008. Its main business is lithium ore mining and production and sales of lithium products. The main products are lithium concentrate, lithium carbonate, lithium hydroxide, lithium chloride, metal lithium. At the end of September 2020, the company completed the sale of the controlling stake in the wood-based panel business subsidiary. At the end of May 2021, the company completed the sale of the rare earth business, focusing on the development of new energy materials business.


Shengxin Lithium Energy has established four major lithium product production bases around the world: (1) Zhiyuan Lithium has built an annual production capacity of 40,000 tons of lithium salts (including 25,000 tons of lithium carbonate and 15,000 tons of lithium hydroxide); (2) Suining Shengxin has built an annual production capacity of 30,000 tons of lithium hydroxide; (3) Indonesia's Shengtuo has designed an annual production capacity of 60,000 tons of lithium salt, which is currently under construction and is expected to be completed and put into operation in 2023; (4) Shengwei Lithium. The designed production capacity of the industry is 1,000 tons of lithium metal per year. At present, the completed production capacity is 400 tons, and the remaining production capacity is under active construction. The company's lithium product business technology is advanced and mature, and its products are mainly used in lithium-ion power batteries, energy storage, petrochemicals, pharmaceuticals and other fields. With the rapid development of the global new energy vehicle and energy storage industry, the market demand for lithium products is strong, providing huge market space and development opportunities for the company.


It is worth noting that on March 22, Shengxin Lithium Energy announced that it plans to introduce BYD as a strategic investor through a non-public offering of shares. After the issuance, BYD will hold more than 5% of the shares of Shengxin Lithium Energy. Shengxin Lithium Energy and BYD also signed a strategic cooperation agreement, reaching an agreement on future purchase orders, new lithium battery technology, and high-quality mineral resource development.


It is reported that Li Qian, secretary of the board of directors of BYD, has been elected as a non-independent director of Shengxin Lithium Energy at the general meeting of shareholders of Shengxin Lithium Energy on May 17, 2022.


In addition to Shengxin Lithium Energy, in recent years, BYD has continued to invest in lithium mines to ensure the supply of battery raw materials.


In 2010, BYD took a stake in Zabuye Salt Lake, the largest salt lake lithium mine in China, and invested 18% of the shares of Tibet Zabuye Lithium Industry, making a certain strategic reserve in upstream raw materials.


In December 2017, BYD announced the establishment of Qinghai Salt Lake BYD Resources Development Co., Ltd. in cooperation with Salt Lake Co., Ltd., in order to start the construction of "an annual output of 30,000 tons of battery-grade lithium carbonate project", with a planned total investment of 4.849 billion yuan, and the project is still in the middle test status.

In January this year, BYD won the bid for a lithium mining project in Chile and obtained a quota of 80,000 tons of lithium production, but it has been suspended by a Chilean court.


On March 30, Sichuan Ludi Mining Co., Ltd., jointly held by Sichuan Luqiao (600039) and BYD Automobile Industry Co., Ltd., was established, of which BYD holds 30% of the shares. The company's business scope includes mining of mineral resources (non-coal mines); geological exploration of metal and non-metal mineral resources; research and development of emerging energy technologies.


On May 12, BYD Automobile Industry Co., Ltd. underwent industrial and commercial changes. The company's business scope added non-ferrous metal smelting; non-metallic mineral product manufacturing; battery manufacturing; resource recycling technology research and development; mineral processing; engineering and technology research and experimental development. According to Qichacha information, the company was established in 2006, its legal representative is Wang Chuanfu, and its registered capital is about 3.758 billion US dollars.


In addition, Rongjie (002192), which has a deep relationship with BYD, is also increasing the development of lithium ore resources. The lithium mines with the largest supply and the most development potential in China are mainly concentrated in Ganzi and Aba Prefectures of Sichuan Province. The proven lithium resource reserves of lithium mines in Sichuan Province are about 1.89 million tons in terms of lithium oxide (about 4.68 million tons in terms of LCE). Moreover, the proportion of resources that have reached the exploration level is only 31%, and there is a huge space for increasing reserves. At present, there are two main lithium mines that have been put into production in Sichuan Province. One is the No. 134 ore vein of Rongjie Co., Ltd., which currently has an ore mining capacity of 1.05 million tons/year and a beneficiation capacity of 450,000 tons/year ore processing; the second is Shengxin. The Yelonggou spodumene mine of Jinchuan Aoino Mining, a lithium energy holding company, currently produces 405,000 tons of raw ore per year.

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