January 17, 2018 / 12:59 PM / 6 months ago

Chinese firm Yongxing jumps on battery bandwagon with lithium project

* Chinese investment in battery-related projects surges

* Firms eye growth in demand for battery materials

* Phasing out EV subsidies may slow sector’s growth

By Tom Daly

BEIJING, Jan 17 (Reuters) - China’s Yongxing Special Stainless Steel Co said on Wednesday it would invest 891.2 million yuan ($138.5 million) in a project to produce battery-grade lithium, in a bid to secure a slice of the world’s biggest electric vehicle (EV) market.

The move takes investments announced by Chinese firms in battery-related ventures in the past week to more than 7.8 billion yuan, even though the phasing out of EV subsidies has cast doubt on whether the EV sector can maintain its stellar growth.

Yongxing, which makes nickel alloy and stainless steel wire rods and bars in Zhejiang province, said it initially aimed to produce 10,000 tonnes a year of battery-grade lithium carbonate at a plant in Jiangxi, with start-up due in the fourth quarter of 2019.

The announcement came a day after Ningbo Shanshan , an established battery industry supplier, said it would invest a total of 5 billion yuan to produce 100,000 tonnes a year of high-density lithium-ion battery cathode materials by 2025, with 20,000 tonnes of capacity by the end of 2020.

Zhejiang Huayou Cobalt Co, one of China’s biggest cobalt firms, said it would set up joint ventures with South Korean steelmaker Posco in Zhejiang to make and sell lithium-ion battery precursors and battery cathode materials. The projects still need company approvals.

Zhejiang Huayou, which has cobalt assets in top producer Democratic Republic of Congo, said its tie-up with Posco was prompted by the “rapid growth” in demand for materials used in lithium batteries.

A Posco spokesman was not immediately available for comment.

Tight supply of battery ingredients, which include nickel, cobalt and manganese for cathodes, has driven up prices, prompting battery makers such as Contemporary Amperex Technology Co (CATL) to consider making upstream investments.

“While the price uptrend momentum of these mineral products remains strong, possible price volatility related to China’s EV sales performance due to government subsidies cuts may present good opportunities for repositioning those cobalt/lithium related stocks,” Argonaut Securities said in a strategy paper.

Reporting by Tom Daly; Additional reporting by Hyunjoo Jin in Seoul; Editing by Edmund Blair

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