Image source @ Visual China
Text | Deep Road, author | Zhou Jifeng, Editor | dawn
Recently, battery manufacturers around the world are doing one thing - rolling up their sleeves to grab lithium mines.
Battery factories are forced to open the "buy buy buy" mode, and the reason behind it is also very "heart-wrenching" - lithium is too expensive to buy.
The core component of an electric vehicle is the battery, and the core raw material of the battery is lithium salt (that is, lithium carbonate, lithium hydroxide and other lithium compounds). An electric car probably needs an average of 30-50kg of lithium carbonate.
As the most common metal raw material, lithium is stored in abundant quantities. According to USGS data, as of the end of 2021, the world's proven lithium resource reserves are 22 million tons of metal lithium equivalent.
But since the second half of last year, the price of lithium has been on a rocket, soaring all the way, and the increase has changed from a few thousand a day to tens of thousands a day, which is even crazier than oil. In December 2021, the price of lithium carbonate was only about 250,000 yuan per ton, but three months later, the price became 500,000 yuan per ton.
The crazy lithium price has fattened upstream lithium mines, lithium salt mining and processing and sales manufacturers, but bitter downstream battery manufacturers and car companies.
Even the head battery companies with large scale and strong bargaining power cannot stand the speed of raw material price increases. There is news that the Ningde era even warned the upstream that if the price of lithium carbonate exceeds 470,000 per ton, it will stop taking orders.
Since the beginning of this year, almost every car company has announced price increases, and even Tesla has taken the initiative to adjust the price three times in eight days. Some cars, such as Euler Black Cat White Cat, were even forced to stop production.
Even Musk couldn't sit still, shouting on his own social platform, Twitter (yes, hot knowledge: Musk bought Twitter): "Lithium prices have reached crazy levels." Unless it chooses to increase the cost of procurement, Tesla may have to directly enter the mining and refining field on a large scale. ”
The landlord's family had no surplus grain.
The battery factory, which has no rice under the pot, decided to skip the layers of suppliers and directly set its sights on the source of the supply chain - lithium mines.
Battery manufacturers are fighting for production capacity, talents, and technology, but now the plan can't catch up with the changes, and everyone has begun to compete for "there are several mines at home".
01 Why is the price of lithium soaring?
This round of lithium price surge, behind the supply and demand mismatch.
We all know that the automotive industry has a long industrial chain and many participants. Specific to the lithium battery industry chain, there are probably several links, lithium miners - lithium salt factory - cathode material factory - battery manufacturers - automobile companies.
Since last year, whether it is the Ningde era or some second-tier battery manufacturers, they are expanding production, starting at 100GWh. However, the production speed of raw materials is not as fast as the speed of battery expansion.
China Merchants Bank Research Institute expects that in 2022 and 2023, the global demand for lithium carbonate will be about 728,000 tons and 896,000 tons equivalent (LCE), respectively, while the global supply of lithium carbonate will be about 690,000 tons and 956,000 tons equivalent (LCE), respectively, and there is a demand gap of 38,000 tons and 59,000 tons. (Equivalent, or LCE, refers to the equivalent amount of lithium carbonate that can actually be produced in solid/liquid lithium ore.) ）
Lithium carbonate is not ready to be produced if you want to.
Before this round of price surge, the price of lithium carbonate fell for more than two years due to the impact of overcapacity. Many upstream lithium mines are difficult to operate, or bankrupt and stop production, for example, on August 28, 2019, The Australian lithium mining company Alita Resources announced bankruptcy and reorganization, and the miners who supported it did not dare to expand production at will.
Quite dramatically, in 2021, the new energy vehicle market exploded, and the demand for battery factories and lithium carbonate also exploded.
The expansion of the battery and electric vehicle industry in the middle and lower reaches is rapid, but it takes time for the mines that have been forced to stop production to reopen, and it also takes a long cycle to re-excavate the mines. A lithium mine has an average period of 3-5 years from design and construction to commissioning.
While waiting to be fed, while still slowly mining, the bizarre mismatch between supply and demand has pushed up the price of lithium.
However, the mismatch between supply and demand can not fully explain this wave of price increases, the ideal CEO Li Xiang once said that the production cost of a ton of lithium carbonate is only 30,000-50,000 yuan, the production cost of lithium carbonate is not high, so why is the price rising so bizarrely?
Chen Shihua, deputy secretary-general of the China Automobile Association, also said in a later interview with the media that the extraordinary rise in raw material prices in this round cannot be simply attributed to the contradiction between supply and demand, which is an irrational rise, and there is a driving force behind it.
An industry insider also explained the doorway to Shentu: "Miners will actually control production capacity, which will exacerbate the imbalance between supply and demand, resulting in a further surge in the price of lithium, so that it can make the most money with the least cost." ”
02 Grab the mine, what is the picture?
In this wave of rising prices, upstream miners or lithium salt manufacturers have made a lot of money. For example, Ganfeng Lithium's revenue for the whole year of 2021 doubled year-on-year, and its net profit increased fourfold to 5.228 billion yuan.
The worst thing about life is the battery manufacturer sandwiched in the middle.
The pressure of raw material price increases was first transmitted to battery manufacturers, but for most battery manufacturers, they did not dare to pass all the pressure on price increases to car companies, on the one hand, the voice of car companies was stronger, on the other hand, they were worried that if the price of battery products was raised too high, they lost the market.
One of the most direct results is that after the soaring price of lithium, the gross profit margins of many battery manufacturers have declined, and the profit margins have been seriously squeezed. For example, in the first quarter of this year, the gross profit margin of Ewell Lithium Energy has dropped to 13.7%. Since the third quarter of 2020, the company's gross margin has declined for six consecutive quarters.
In order to survive such fierce competition, battery manufacturers have launched a crazy capacity war, and the supply chain has become the biggest weakness of expansion.
Now, all battery manufacturers are facing such an embarrassing situation: the front line is fighting, but the rear supply is extremely tight, and even the "life-saving food" is too expensive to buy.
Many battery factories have been forced to carry out self-help, and one of the ways to save themselves is to go upstream to grab mines. "It's not that the price of raw materials has increased, so I will go upstream to buy minerals." An industry insider said.
Specifically, mining grabbing is actually involved in the development of lithium resources of upstream lithium miners or lithium salt factories through investment, capital increase, equity participation, acquisition, etc. But not all battery factories have the opportunity to have the ability to grab the mine.
Zhang Lu, an investor who has long been concerned about the battery industry, told Shentu: "There are huge risks in grabbing mines, which require huge financial support, which has a great test of corporate cash flow. For example, Tianqi Lithium was once saddled with huge debts due to the purchase of a 23.77% stake in the global salt lake giant SQM.
Zhang Lu pointed out: "Battery factories actually buy mines mainly to ensure supply, and improve upstream control, otherwise battery factories have no bargaining power in the face of upstream suppliers." ”
There are mines at home, which also alleviates the pressure on the price of raw materials to a certain extent.
Taking Guoxuan Hi-Tech, a power battery factory with the fourth largest installed capacity in China in 2021, as an example, the cumulative production capacity of the three lithium carbonate projects of Yichun Kefeng, Fengxin Guoxuan and Yifeng Guoxuan in Yichun, Jiangxi Province, is 120,000 tons / year.
Now the market price of lithium carbonate is 500,000 yuan per ton, if li wants to say 50,000 yuan per ton of lithium carbonate production costs to calculate, do not consider other costs, Kefeng's 10,000 tons of production capacity a year can save Guoxuan Hi-Tech billions of yuan in raw material costs.
03 Where do you go to sweep the goods?
Lithium is mainly found in two places: lithium salt lakes and lithium mines. Most of these two resources are distributed in Australia and South America.
Among them, Chile's lithium resource reserves account for 42%, Argentina accounts for 10%, mainly concentrated in the "lithium triangle" area at the junction of Chile, Argentina and Bolivia, in the form of salt lakes. Australia's lithium resource reserves account for 26%, mainly in the form of spodumene.
Huaxi Securities said that the dependence of lithium ore resources on the mainland has reached 85%. Chinese companies also once had a wave of overseas mining grabs.
However, overseas mining is not all smooth sailing.
Overseas mining has been blocked, and many battery factories have also set their sights on China. Compared with the mines in Western Australia and the salt lakes in South America, the total amount of lithium resources in China is not abundant, and the difficulty of mining is relatively large. However, in line with the principle of "having mines at home and not panicking in your heart", many battery factories have also begun to hoard domestic lithium mines.
In China, lithium mines are mainly distributed in several regions, Jiangxi, Sichuan, Qinghai, and Tibet.
In this frenzy of buying ore, the Ningde era is rich and powerful, and it is the earliest battery factory that has sold the earliest and hoarded the most goods. Today, CATL has invested in the North American lithium industry, the Canadian mining company Neo Lithium, the Australian mining company Pilbara Minerals and other enterprises.
Its lock mine is centered on Sichuan. On March 22, Shengxin Lithium Energy issued an announcement that it intends to raise no more than 3 billion yuan from BYD and other fixed funds. It is worth noting that Shengxin Lithium Energy owns shares in many lithium mine resources in Sichuan.
In addition, in 2021, the domestic power battery installed capacity ranked eighth in the Billion Wei Lithium Energy also has a layout lithium mine, but it focuses on salt lake resources.
Hive Energy is a relatively early investment in domestic lithium mines. Hive Energy was originally the power battery division of Great Wall Motors, and then became independent in 2018, and in the year of independence, Hive Energy invested in two companies, Guangxi Tianyuan and Yongshan Lithium.
This year, the company has also joined the tide of mine grabbing. On March 30, Hive Energy and BASF Shanshan strategically invested in Hunan Yongshan Lithium, and will each hold 10% of the latter's equity after signing the agreement. During the cooperation period, the three parties will reach strategic cooperation in industrial capital operation, lithium salt product supply, and lithium mine resource development.
04 When will it end?
Recently, lithium prices have fallen back a bit. According to data from HaigangLian, on April 21, the quotation of some lithium battery materials fell again, and the average price of battery-grade lithium carbonate fell by 7500 yuan / ton to 475,000 yuan / ton.
The price decline in lithium prices has a certain relationship with the intervention of regulatory authorities.
Because lithium prices are too crazy, on April 19, Luo Junjie, spokesman for the Ministry of Industry and Information Technology, said at a press conference of the State Council New Office that it will promote the price of raw materials for new energy vehicles to return to rationality as soon as possible. The Financial Associated Press also reported that the relevant departments recently interviewed some lithium salt companies and asked to promote reasonable and stable operation at reasonable prices.
Of course, the market rumors that battery giants and cathode material factories boycotted the purchase of high-priced lithium carbonate, saying that "more than 500,000 yuan / ton of lithium carbonate are not bought", which may have promoted the price of batteries to a certain extent.
The price of lithium carbonate continues to fall, and it has lost the 500,000 yuan / ton mark, does this mean that the price of lithium carbonate will return to normal in the future?
Sorry, it's hard.
Zhang Lu predicted: "The industry estimates that the second quarter may be the low point of this year, but the pullback I think is not large, in essence, the lack of lithium has not improved." Large-scale expansion is to begin in 2021, lithium mine capacity expansion cycle is long, at least two years. ”
Market research firm Wood Mackenzie also predicts that stimulated by high oil prices and climate targets, global lithium battery demand is expected to exceed 3,000 GWh by 2030, while the demand for electric vehicles will account for more than 80% of all lithium battery demand, and the global lithium supply and demand tension is expected to ease after 2023.
"But after 2023, we also have to look at the relationship between supply and demand, domestic lithium resources are not rich, and the purity and mining difficulty are not small, I feel that we have to do the recycling system, otherwise the future lithium resources are still very tight." Zhang Lu pointed out.
Moreover, battery factories lack more than one raw material, lithium. The higher the nickel content, the greater the space for the energy density of the power battery to be improved, which has gradually become the consensus of the industry. Nickel ore has also become the "new favorite" of the competition.
"From lithium ore, nickel ore, cobalt ore, to the main material, to lithium iron phosphate, to ternary, all have to be vigorously laid out." Cai Jinshu once told the media bluntly.
From a longer-term perspective, this wave of price increases will affect the development of the entire power battery industry.
Zhang Lu pointed out: This wave of raw material price increases is a huge challenge for all battery manufacturers. However, the head and second-line battery factories still have the ability to withstand the cost pressure, go upstream to grab the mine, and ensure the supply of raw materials. However, for battery factories outside the second-tier battery factories, that is, battery factories outside the top ten installed capacity, the impact of raw material price increases will be greater.
Zhang Lu further explained: "Battery factories outside the second line would have worse economies of scale and internal control than the head, and the cost of producing batteries with the same performance is higher. As raw materials rise again, their future survival is a problem. ”
How to ensure supply while expanding production is a huge challenge for all battery factories. Starting from the rush to the mine, the raw material supply war of the battery factory has begun, which is a long-term tug-of-war related to funds, contacts and strategic vision. Battery factories need to swim between upstream suppliers and race against time. (This article was first published on the Titanium Media APP)
[At the request of the interviewee, Zhang Lu is a pseudonym in the article.] 】