After shaking up nickel, Chinese Tsingshan bets on lithium

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Tsingshan Holding Group, the Chinese company that rocked the nickel world by rapidly ramping up production in Indonesia, is among the latest entrants to the white-hot lithium sector, potentially making it a one-stop-shop for battery ingredients. electric vehicles (EV).

Tsingshan, primarily a stainless steel maker, emerged out of nowhere to become the world’s largest nickel producer in 2018 thanks to its pioneering use of low-grade nickel pig iron.

She and her compatriot Chengxin Lithium Group Co will produce 60,000 tons per year of lithium chemicals at a lithium processing plant in Indonesia, Chengxin said in a company file, the first announcement of such a plant in the country. .

Coupled with the production of battery-grade nickel and cobalt already under development at its Indonesian facilities, lithium supplies would make Tsingshan a large-scale producer of three key ingredients required for electric vehicles and other rechargeable batteries.

Tsingshan did not respond to a request for comment on his lithium plans, but a company executive told Reuters that “the battery business will become a new core business.”

Tsingshan owns 35% of the project and Chengxin 65%. The partners will use their own funds for 30 percent of the funding for the $ 350 million plant, 70 percent of which will come from loans, according to the filing.

No start date for the lithium plant has been given, and it still faces challenges. A Chengxin official told Reuters it would need 450,000 tonnes of lithium concentrate per year for the project, all from hard rock lithium ore.

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Unlike nickel and cobalt, which are found around Tsingshan’s operations in Indonesia, no known lithium deposits are mined in the country. This means that the partners will have to look abroad for a supply of lithium-rich minerals such as spodumene to power the plant.

“It is possible that Chengxin could obtain additional withdrawals … but the competition for spodumene concentrate is likely to be fierce,” said Allan Pedersen, analyst at Wood Mackenzie.

Chengxin said he would “work with partners to secure the raw material supply for the project,” noting that it was still in its early stages.

The Shenzhen-based company said it recently expanded its upstream resource base through acquisitions in Argentina and Zimbabwe. It also owns a stake in Huirong Mining, which is exploring a lithium mine in China’s Sichuan province.

Tsingshan itself is aiming for an annual output of 24,000 tonnes of lithium carbonate equivalent in Argentina after partnering with French company Eramet and is preparing to manufacture lithium iron phosphate (LFP) battery materials in Indonesia with Jiangsu Lopal Tech Co Ltd, Tsingshan partners said.

Indonesia’s proximity to Australia will also help, experts say. Australia is by far the world’s largest supplier of spodumene and is expected to generate 51% of the global increase in lithium raw material supply in 2020-25, said analyst Alice Yu of S&P Global Market Intelligence .

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ENERGY TRANSITION TRIO

Tsingshan is already forecasting annual production of at least 230,000 tonnes of battery-grade nickel and around 27,000 tonnes of cobalt with other partners in Indonesia. The commissioning of the lithium plant would give Tsingshan substantial volumes of a trio of metals linked to the energy transition.

Tsingshan lithium would also advance the Indonesian government’s ambitions to become a leading player in the electric vehicle supply chain https://www.reuters.com/article/indonesia-electric-idUSL4N255133, following ‘significant investments in the country by battery manufacturers LG Chem Ltd and Contemporary Amperex Technology Co Ltd (CATL).

Indonesia aims to produce 140 gigawatt hours of batteries by 2030, when it would need around $ 35 billion in investment to develop an electric vehicle ecosystem, which includes electric vehicles, battery installations, charging stations, recycling and battery exchange facilities, in five to ten years. officials said.

Earlier this year, the government launched Indonesia Battery Corporation, a state-owned company aimed at developing the country’s battery sector.

“The Chengxin / Tsingshan Lithium Plant in Indonesia is expected to benefit from domestic demand and is strategically placed to be the lithium supplier of choice for domestic battery makers who will not have to pay the shipping costs that they would otherwise have to pay to import lithium. “said Sabrin Chowdhury, analyst at Fitch Solutions.

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Tsingshan is also expected to benefit from a 2 gigawatt clean power plant project in Indonesia that will help lower the company’s electricity costs and increase its attractiveness as a low-emission supplier of key materials for electric vehicles.

But Tsingshan also faces the fundamental challenge of profitably producing refined lithium products from scratch.

By converting locally abundant low grade nickel pig iron on a large scale to premium nickel matte – an intermediate product that can be used to make both stainless steel and batteries – the company has made evidence of a technological savvy that put him on the radar of anyone tracking the electric vehicle supply chain. Questions remain as to whether he can achieve a similar feat with much rarer lithium, which has its own unique geological characteristics.

“It is questionable if they can challenge the Big 5 in the lithium space,” said Gavin Montgomery, director of Wood Mackenzie, referring to lithium giants Albemarle Corp, Ganfeng Lithium Co Ltd, SQM, Tianqi Lithium Corp and Livent Corp.

“But people should never underestimate Tsingshan.”

(Reporting by Mai Nguyen in Hanoi and Tom Daly; additional reporting by Fransiska Nangoy in Jakarta; editing by Gavin Maguire and Raju Gopalakrishnan)

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