Promising outlook for battery material market

Asian Metal: Hello, Mr. Cao, thank you for accepting the interview with Asian Metal. Would you please give a brief introduction to your company?

Mr. Cao: Founded in 2006, Greatpower Technology came to the cobalt market from 2009 and has been taking cobalt and nickel as the core products. The company made its entry to the production industry following acquiring Zhejiang Jialike in 2016, and is determined to build a world-leading ecological circle for the production of new energy power battery. Greatpower Jinchuan Advanced Battery Materials Corp is a subsidiary of Greatpower Technology Co., Ltd.

Putting production as its top priority, the company is about to form an annual capacity of 6,000 metal tons of cobalt sulfate as well as the capacity of nickel sulfate. Moreover, we are designing a NCM precursor project of 20,000tpy.

Asian Metal: With fierce competition in the new energy market, your company sets foot in the markets of nickel, cobalt and lithium, main raw materials of battery production, and has improved the industrial chain integration from upstream to downstream. What do you think are the advantages and characteristics of your company?

Mr. Cao: The new energy market is expanding persistently and dramatically, but the leading effect of cobalt and lithium markets in the whole industry chain is also becoming increasingly obvious with Jinchuan as a major producer in the nickel market and Huayou and GEM as the leading enterprises in the cobalt market. From the perspective of industrial chain, the new energy market is still in the early-to-middle period of industrial competition, and its corresponding degree of marketization and industrialization is in the integration stage for industrial chain.

Greatpower Technology transforms the traditional supply chain advantage into that of production and operation in the industrial chain, which is our feature. It has obvious advantages over competitors in the allocation of nickel and cobalt resources. At present, the company owns a large amount of nickel resource, and it will all be converted to production capacity of nickel sulfate, which is unique in the industry. Our company is the largest listed company in terms of the nickel sulfate capacity.

Asian Metal: The demand from the Chinese battery market was weak due to the slack season of 3C electronic markets recently, leading to sluggish demand for cobalt. As an emerging cobalt salts production enterprise, how does your company deal with the situation?

Mr. Cao: The softened market recently is only a short-term adjustment of high prices. In the long run, the demand for power battery is very strong, and the future market is still promising with demand to increase. The current market is vulnerable to some extent and we will decide whether to conclude transactions in domestic or overseas market based on market conditions.

Asian Metal: The new energy vehicle market is still the main source of growth for domestic nickel and cobalt demand currently. In addition, the new energy subsidy policy requires higher energy density, so high nickel products sell well. What is the plan for the nickel salt development in your company?

Mr. Cao: We have ambitious plan on nickel salt development, which is still in a relatively confidentiality stage. But our overall development goal is very clear: combine with the company's own resource, and convert it into nickel sulfate production capacity as soon as possible to become the leading nickel sulfate producer of the industry.

Asian Metal: Market players believe that the decrease in new energy subsidy leads to the scarce demand for battery and its raw material in China. What is your opinion on this? What is the influence of subsidy policy adjustment on the future market?

Mr. Cao: We believe that the new energy subsidy policy is a reason for the sluggish market, but not the main one. Because the subsidy policy is currently in the shift-up period based on the energy density. Lithium iron phosphate will be largely replaced by ternary material and precursor in the future, which is a market trend and will have a great impact on future market development.

Asian Metal: Affected by the environmental acceptance check at present, some producers in Jiangxi, Jiangsu and other regions reduce their operating rates, which provides support to prices for cobalt sulfate and other cobalt products to some extent. In your opinion, will the prices go back to high levels?

Mr. Cao: The central environmental inspection teams surely shut down a number of plants in Jiangsu and Jiangxi, mainly because those companies did not produce in line with the national environmental requirements and had a low investment in environmental protection equipment. In accordance with the requirements of the central and local governments, our company invested nearly RMB100 million in environmental protection equipment, so we can maintain normal production no matter how strict the environmental inspections become. Of course, the shutdown of plants has certain support for prices of cobalt sulfate and other cobalt products in the short term, and prices will gradually pick up in the future as the demand from the power market will rise.

Asian Metal: The second half of 2018, especially Q4, witnesses the peak season for the battery market. Nickel prices are fluctuating while those for cobalt are retreating at present. What do you think are the other factors influencing the market in H2 of 2018?

Mr. Cao: From a macro perspective, China-US trade war and other uncertainties are affecting the market. As a long-term factor, trade war has little impact in the short-term. In addition, we learn some news that the Indian government requires local enterprises to acquire nickel and cobalt mines globally, and in the long run, the nickel and cobalt markets still advance steadily, with only temporary difficulties.

Asian Metal: Thank you very much for this interview with Asian Metal and wish your company a bright future!

Mr. Cao: Thank you!