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Pengxin Resources Sign a Strategic Cooperation Agreement with Greatpower Technology

On November 16, 2017, Pengxin Resources announced that the company recently signed a Strategic Cooperation Framework Agreement with Greatpower Technology Co., Ltd., in which both sides intended to establish long-term, comprehensive and stable strategic cooperative relations in the new energy storage sector.

According to the agreement, regarding the upstream sector, the company agreed to provide 30% of Congo SMCO's primary cobalt hydroxide output to Greatpower Technology for cobalt production and the supply period is 5 years commencing from the first Bill of Lading date. Regarding the downstream sector, the two sides will cooperate in technology R&D, construction of new production lines, expansion of existing production lines, mergers and acquisitions in the new energy storage sector. In addition, they will cooperate in domestic and foreign financing, domestic and foreign capital market connection, and design of investment, merger and acquisition and capital operation programs to jointly promote their financialization and capitalization.

It's learned that Congo has the most copper and cobalt resources in the world, accounting for 52% of the world's cobalt reserves. Pengxin Resources acquired Congo's SMCO project and set up Congo SMCO Co., Ltd. On this September 25, Pengxin Resources held the SMCO cobalt project groundbreaking & Congo Cobalt Ore Trading Center establishment ceremony in Congo. This means that Pengxin Resources has enriched its presence in the nonferrous metal sector and the newly-established Congo Cobalt Ore Trading Center will produce a synergistic effect with the SMCO cobalt project. The development idea of integrating stores and factories will further expand the local influence of the SMCO cobalt project and enhance the company's bargaining power in the global cobalt market.

With the rise of new energy vehicle consumption, the pattern of global cobalt consumption has changed dramatically. The proportion of new energy vehicles increased rapidly from 3.9% in 2014 to 13.7% in 2016, and is expected to reach 20.3% in 2018. In the next two years, global cobalt demand will continue to maintain rapid growth. Due to the strong growth of demand for new energy vehicles, the growth rate of global cobalt demand is expected to be 9.71% and 7.59% in 2017 and 2018 respectively, and the corresponding demand for refined cobalt is 115,100 tons and 123,800 tons respectively. The industry is expected to face a shortage of 8,800 tons and 11, 200 tons of metal cobalt in 2017 and 2018 respectively, and the price will continue to be strong.

The company said that the signing of the agreement is in line with its strategic development plan and will help promote the company's development in the resource industry and the new energy storage sector and improve the company's industrial presence.