With Market Value of RMB 80 Billion and Annual Production of 100000 Tons, Another Company Gets Involved in Lithium Iron Phosphate

In the evening of July, 25th, LB Group (002601) made announcement that its affiliated subsidiary, Henan Baili New Energy Material Co., Ltd (“Baili New Energy” in short), plans to, together with Hubei Wanrun New Energy Technology Incorporated Company (“Hubei Wanrun New Energy” in short), establish a joint venture company to launch a production line for lithium iron phosphate with annual capacity of 100000 tons. The joint venture is called Hubei Baili Wanrun New Energy Co., Ltd. (tentative) (“Baili Wanrun” in short). It boasts a registered capital of RMB 100 million, of which RMB 51 million is subscribed by Baili New Energy and RMB 49 million is subscribed by Hubei Wanrun New Energy, both in cash.

According to the announcement, business scope of Baili Wanrun is: research, development, production and sales of Li-ion battery materials and equipment; import and export of goods, import and export of technologies, processing imported materials and business of three import and compensation trade; transportation of general goods etc. Also according to the announcement, the industry is facing a shortage of iron phosphate due to rapid growth in demands and capacities for lithium iron phosphate that uses iron phosphate as a core raw material. As new energy technologies are getting promoted, lithium iron phosphate batteries are being extended in application, as a result, iron phosphate, as the precursor of lithium iron phosphate, enjoys a promising future.

Based on information from LB Group, Hubei Wanrun New Energy boasts the strengths of iron phosphate industrialization, technologies and marketing. In order to seize opportunities in new energy market and improve added value of the company’s by-products like ferrous sulfate, LB Group decided to co-found the joint venture for this iron phosphate project that can utilize both sides’ local resources and supporting facilities for proximity supplying of ferrous sulfate and related facilities. In this way, both raw material supplying and production and transportation cost reducing can be well realized.

According to information, LB Group is a company long devoted to the deep integration of titanium and zirconium industrial chain, and development and production of new materials. It is also a company boasting the technology and industrial chain in sulfuric acid method and chlorination process, which is seldom seen in this industry globally. The Company has basically constructed a quality industrial development system covering “titanium, zirconium, vanadium, iron and scandium”. Currently, LB Group’s titanium sector owns 7 major production bases in 6 regions covering 5 provinces, i.e. Jiaozuo of Henan, Deyang and Panzhihua of Sichuan, Xiangyang of Hubei, Chuxiong of Yunnan and Jinchang of Gansu, shaping an industrial pattern covering mineral dressing of vanadium titano-magnetite, restoring titanium, high titanium slag, synthetic rutile and other deep processing of raw materials, and sulfate process titanium dioxide, chloride process titanium dioxide, titanium and other products. In addition, LB Group invested in the smart manufacturing transformation of 30000-ton-annual-capacity rotor-grade titanium sponge project. The Group’s zirconium owns production bases covering Shantou and Shaoguan of Guangdong, Hengyang of Hunan, Chaoyang of Liaoning and Perth of Australia, shaping high-end industrial chain covering zircon sand, zirconium oxychloride, zirconium dioxide, fuse zirconium, sponge zirconium, structural ceramics and nuclear-grade zirconium. In the future, the sector of the Group will be further extended to electronic-grade zirconium application.

As a matter of fact, LB Group has set its heart on battery field since long ago. On December, 8, 2020, LB Group made an announcement that it would invest RMB 100 million in setting up Baili New Energy in Jiaozuo of Henan, with business scope of technical development, technical transfer, technical consultation and technical service in the field of new energy technologies; development, production and sales of electronic materials; manufacturing and sales of batteries; import and export of goods and technologies; leasing of rechargeable batteries, recycling of NEV used power batteries, and inspection and testing service. On March, 25 this year, LB Group made announcement of capital increase saying it increased capital of RMB 900 million to Baili New Energy with its own capital, after which registered capital of Baili New Energy increased from RMB 100 million to RMB 1 billion. On February, 18, 2021, LB Group made announcement that Baili New Energy would invest RMB 300 million in setting up Henan LB New Material Technology Co., Ltd. (tentative, “LB New Material” in short) in Qinyang of Henan, with business scope of battery manufacturing, battery sales, development of special electronic materials, manufacturing of special electronic materials, sales of special electronic materials and recycling of NEV used power batteries (hazardous wastes operation not included).

Beside LB Group, in the beginning this year, another titanium dioxide company, CHTI (002145), made announcement that it would make full use of the current 100000-ton crude product capacity of its wholly-owned subsidiary, Gansu East Titanium Co., Ltd., and invest RMB 10 billion in extending business to lithium iron phosphate market. On May, 24, CHTI released Plan on Private Offering of A-Share Stocks in 2021, indicating its plan on issuing no more than 616 million stocks non-publicly to raise funds of no more than RMB 7.091 billion (the figure included), which will be all invested, after operation fee deducted, in deep processing of circulating titanium dioxide, water soluble monoammonium phosphate (water-soluble fertilizer) resource circulating and 500000-ton iron phosphate project and supplemental working capital.