"Silicon Island, a remote peninsula in southern China, has become a 'devil's gift'. There, toxic waste enough to trigger a catastrophic ecological crisis is a business, and the 'corpses' of electronics are creating a new storm. People sell everything – their labor, their resources, their environment, their families, their lives and their dignity – for small profits. ”
This is the picture presented by the science fiction novel "Desert Tide". The tide of physics, the tide of capital, the tide of information, the storm tide that destroys all plans and destinies, the endless tide of water pouring out from all levels, washing all people's senses.
This isn't just a fictional scene from a novel. E-waste is not far away. According to data disclosed on the official website of the World Health Organization, millions of electrical and electronic equipment are scrapped every year due to product damage, or are discarded due to obsolescence. These discarded devices are considered e-waste and can pose a threat to the environment and human health if not properly treated, disposed of, and recycled.
Waste power batteries for new energy vehicles are one of the major categories. "Since 2015, the production and sales of new energy vehicles in mainland China have grown explosively, and behind the rapid development of the new energy vehicle industry, the 'retirement tide' of power batteries will also break out. Some industry insiders told the Financial Times that at present, green, safe and efficient disposal of waste power batteries has become a new industry with huge demand.
Power battery "retirement tide"
The power battery is the "heart" of new energy vehicles, and the production cost accounts for 30% to 40% of the cost of the whole vehicle. Generally speaking, after 6 to 8 years of use, the battery capacity of the vehicle is less than 80%, and it will be "retired".
According to data from the China Association of Automobile Manufacturers, as of 2022, the production and sales of new energy vehicles in mainland China will be 7.058 million and 6.887 million respectively. The installed capacity of power batteries also continues to grow rapidly. According to the statistics of Gaogong Lithium Battery, from 2016 to 2022, the installed capacity of power batteries in China will reach 28.2GWh, 36.39GWh, 56.98GWh, 62.38GWh, 62.85GWh, 139.9GWh8, and 260.94GWh respectively. In view of the average service life of power batteries for new energy vehicles is about 6 to 8 years, power batteries will usher in a large-scale "retirement tide" in the next few years, and the industry and research institutions are generally optimistic about the development space of the power battery recycling industry.
As a major province in advanced manufacturing, Guangdong has ranked first in automobile production and consumption in China for six consecutive years. Among them, the output of new energy vehicles in 2022 will be close to 1.3 million, a year-on-year increase of 140%, accounting for about 18% of the country's total output, with a rapid growth rate. In this context, the pressure of the "retirement tide" of the first batch of power batteries should not be underestimated.
"'Retired' power batteries generally still have 70% to 80% of the remaining capacity, which can be downgraded for agricultural machinery, small micro power tools, energy storage, power backup and other scenarios, and there are still a large number of valuable metals and other renewable materials in the dismantled materials to maximize the use of resources. A person in charge of a related industry told reporters that batteries that cannot be used in echelons will be recycled, and valuable metal materials such as lithium, cobalt, and nickel will be crushed and recycled.
Veolia New Energy Technology (Jiangmen) Co., Ltd. is the first new energy enterprise in the battery field in China under Veolia China Holdings Co., Ltd., a Fortune 500 company, aiming at the business of recycling waste power batteries.
The "roadblock" in front of the company is that it is difficult to obtain project financing. The reporter learned that the company's waste power battery comprehensive recycling project belongs to the field of hazardous waste treatment in the solid waste industry, with a total investment of 113 million yuan, and the source of funds is its own funds and bank loans. Among them, it is planned to use long-term loans of 68 million yuan, accounting for about 60% of the construction investment. Despite what may seem like a big project, it's not easy to get a loan.
"The main business entity of the project is a newly established Sino-foreign joint venture, and there is a lack of historical operating data, so the bank can only rely on future calculation data to judge its repayment ability, and the first source of repayment is not clear. In addition, the value of the collateral of the project itself is low, and the shareholders do not provide joint and several liability guarantees, and the secondary source of repayment is insufficient. Jin Miaogen, president of the Jiangmen branch of the Bank of Guangzhou, explained that at that time, the power battery recycling industry participants were mixed, the industry policy lacked unified national standards, small enterprises, small workshops accounted for a large proportion of the market, and the development prospects of high-standard enterprises such as Veolia were still unclear, so there was some pressure on financial integration.
"Solid waste loan" innovation and breakthrough
Although the development prospects of the company are still uncertain, the prospect of the waste battery recycling project and the development concept of green environmental protection have made Bank of Guangzhou determined. "Through comprehensive assessment, we expect that Guangdong Province will usher in the first wave of 'retirement' of automotive power batteries in 2023, and the 'retirement' of batteries will reach 2.6 million tons by 2028. In addition, the majority shareholder of this project is the Veolia Group, which has a solid technical strength and a long-term focus on the design and implementation of solutions in the field of wastewater, waste and energy management to support the sustainable development of towns and businesses, which is in line with our development goals. Jin Miaogen explained to reporters why the Bank of Guangzhou is willing to create conditions to support the project.
In the view of industry experts, the recycling of waste power batteries belongs to the blue ocean industry to be explored. "In recent years, the development momentum of new energy vehicles is good. However, the scrapping and recycling of power batteries, which are closely related to new energy vehicles, are still in their infancy. Experts said that from the mainland to encourage the development of new energy vehicles has gone through more than 10 years, if according to the battery shelf life of 6 to 8 years of the standard to calculate, then, the power battery has entered the "elimination period", there are a large number of power batteries waiting to be updated or removed.
"According to the traditional scheme, this project loan has encountered many challenges. After detailed research and judgment, we have launched the 'Solid Waste Loan' to help enterprises raise funds. Jin Miaogen explained that "solid waste loan" is a special green finance product, which can solve the above problems in a targeted manner. Taking Veolia as an example, since the main body of the project is a newly established project company specifically for the construction of this project, it has been established for a short time, has not yet been officially launched, and has no operating income, so its credit record analysis and financial analysis are limited. However, Bank of Guangzhou did not simply refuse, but appropriately relaxed the loan access requirements for the implementing entity by analyzing the similar projects that have been put into operation by the implementing entity's holding legal person, the settlement of upstream and downstream companies, industry evaluation, financial and operational conditions, and development trends.
At the same time, in order to control the risk, the loan implements a triple joint guarantee, and adopts the guarantee mode of "mortgage of land use right and above-ground construction in progress + mortgage of machinery and equipment + pledge of accounts receivable" to achieve full coverage of the applicant's credit risk. Among them, the mortgage of land use rights and above-ground construction in progress (or immovable property) is adopted in the early stage of the loan, and the mortgage of equipment is relaxed to one month on the premise that the purchase invoices for machinery and equipment are complete; and if the project implementation entity has signed a framework procurement agreement with the main downstream and the counterparty meets the access conditions for the payer in the "solid waste loan", Bank of Guangzhou will add the pledge of accounts receivable as one of the security methods on the basis of taking into account the land use right of the project and the subsequent market value of the above-ground construction in progress.
Jin Miaogen said that the "solid waste loan" can not only help sort out the target customers and target projects in Jiangmen, but also have a certain focus on the design of the project plan, which effectively solves the problems of the bank's business marketing difficulties and low landing efficiency, so as to support the development of the local solid waste treatment industry more efficiently and down-to-earth.
There are many other financial support products such as "solid waste loan". The Financial Times reporter learned from the Guangdong Branch of the People's Bank of China that as of the end of 2023, the balance of loans from financial institutions in Guangdong Province in the industries of resource recycling, hazardous waste treatment, and comprehensive utilization of waste gas, wastewater and waste residue was 261.5 billion yuan, a year-on-year increase of 58%.
Create a "small, specialized, fast" advantage
In fact, with the rapid development of the new energy vehicle industry, there are many innovative explorations around power batteries. For example, after learning of EVE's investment plan and financing needs, CCB Huizhou Branch provided fixed asset loans for projects under construction such as "Intelligent Manufacturing Project of High-performance Soft-pack Lithium-ion Power Battery for Vehicles" and "Lithium-ion Power Battery Project for Passenger Vehicles" to help break through the bottleneck of power battery production capacity. At the critical moment of the company's expansion, CCB Huizhou Branch provided an M&A loan financing plan to EVE's controlling shareholder, and provided EVE with an M&A loan financing of RMB 900 million to help EVE successfully complete the private placement.
As a professional automobile insurance company under GAC Group, Zhongcheng Automobile Insurance Co., Ltd. provides insurance services for new energy vehicles, and has compiled the group standard of "Management Specifications for Safe Storage of New Energy Power Batteries" by using the experience of disaster prevention and loss prevention risk management and control accumulated in the automobile industry chain.
"This is an increasingly professional and promising track. An expert told the Financial Times.
In Jin Miaogen's eyes, green finance is becoming an important starting point for small and medium-sized banks to establish competitive advantages. "In recent years, with the gradual sinking of the business of large banks, small and medium-sized banks are facing obvious competitive pressure, and green finance is one of our 'business cards'. Jin Miaogen told the Financial Times that striving to become a "green finance expert" is becoming an important goal of the bank's development.
"The support that the People's Bank has given us is very important. Jin Miaogen said that Bank of Guangzhou will be included in the support scope of the People's Bank of China's carbon emission reduction support tools in 2023, and the cumulative amount of loans in line with carbon emission reduction support tools has exceeded 100 million yuan in the following six months. Among them, Bank of Guangzhou Jiangmen Branch has achieved the bank's first carbon emission reduction loan in the field of energy conservation and environmental protection. As of the third quarter of 2023, 2 carbon emission reduction support loans have been successfully implemented, with a loan amount of 46.23 million yuan, driving annual carbon emission reduction of about 16,400 tons of carbon dioxide equivalent. He said.
In addition, Jin Miaogen also mentioned that the preferential green credit policy can alleviate the cost pressure of small and medium-sized banks, but the term of carbon emission reduction tools is not more than 3 years, while the term of green projects in the current market is generally longer, and the term and continuity of carbon emission reduction policies are expected to be further optimized.
"Due to our own scale constraints and lack of capital cost advantages, the projects we serve are often smaller in size, and more than supporting private enterprises and state-owned small and medium-sized projects. Jin Miaogen said that the types and situations of projects developed by such customers in the market are very different, which requires a high degree of professionalism from Guangzhou banking business personnel and background review and approval personnel. At the same time, in the market environment with a high assimilation rate of many financial institutions, small banks can identify and innovate faster to accurately adapt to the needs of market players.
Source: Financial Times client
Reporter: Ma Meiruo
Editor: Yang Jingyi
Email: [email protected]