Huayou Cobalt Invest RMB 6.3 billion to Build an Intelligent Manufacturing Base

Huayou Cobalt announced on the evening of March 12 that the company (or its subsidiary) plans to invest in the construction of an intelligent manufacturing base for new energy materials (an annual 150,000-ton ternary precursor material project for lithium batteries).

The total investment in the project is RMB 6.36982 billion, out of which RMB 5.01684 billion will be invested in the construction works. The interest over the construction period is RMB 486.02 million and the working capital is RMB 866.96 million. According to the announcement, the project will be located in Tongxiang City of Zhejiang Province and cover a land area of 656 mu (1 mu is about 667 square meters). The project will mainly produce 150,000 tons of ternary precursor materials for lithium batteries every year by using equipment such as extraction boxes, reaction kettles, precision filters, electrodialysis systems, steam compressors, rotary kilns for vacuum calcination and MVR evaporation systems. 30% of the project's investment amount will be raised by the company itself and 70% by bank loans. The announcement indicated that this project is an arrangement made by the company according to its medium-and long-term development strategy as well as an important measure for the company's transformation to the lithium battery materials industry. In addition, the project meets the fast-growing demand for new energy materials for lithium batteries brought by the development of new energy vehicles and is expected to exert a positive impact on the company's future performance.

An industry insider said that the company is mainly engaged in the manufacture of new energy materials for lithium batteries, the deep processing of new cobalt materials and the mining, dressing and smelting of non-ferrous metals, such as cobalt and copper. The insider predicted the net profit attributable to shareholders of the listed company for 2017 is between RMB 1.65 and 1.9 billion, an increase of 2283.10% to 2644.18% compared with the same period of the previous year. The insider pointed out that the increase is partly due to the rising prices of cobalt products resulting from the growing demand of lithium-ion battery (including 3C lithium batteries and lithium power batteries) materials for cobalt products and partly due to the company's greater competitive edge as a result of larger cobalt capacity, optimized product structure and lower manufacturing costs.

At present, the company ranks first in the world in terms of cobalt capacity, with the production and sales of cobalt products accounting for more than 40% of the domestic market, and exports further expanding. With increased investment in technology research and development and industry-leading gross interest rates of its cobalt salt products, the company has demonstrated excellent sustainability. From the current perspective, as the supply and demand gap widens, the electrolytic cobalt price is expected to remain at a high level in 2018, and the company will continue to benefit from it.

The investment project conforms to the national macro industrial policy, properly combines the advantages of the company itself and meets the demand of the new energy market for high-end power battery materials. It will help improve the company's comprehensive competitiveness, and facilitate its further business development.