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    002466   CNE100000T32

TIANQI LITHIUM CORPORATION

(002466)
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Western Australia takes step-up in battery chemicals production

08/03/2021 | 02:06am EDT
FILE PHOTO: A view of a new nickel sulphate plant that global miner BHP Group is building to service the battery industry at its Nickel West operations, south of Perth

MELBOURNE (Reuters) - Western Australia is preparing to take a bigger slice of the booming global battery market, forecast to grow to $150 billion by 2030, as it moves beyond mining lithium and nickel into chemical processing.

Three big battery chemicals plants are set to come on line in coming months, while Germany's BASF is part of a pilot project with a state government research body to build a precursor chemical plant to blend the feeds used by battery makers.

As investors and electric vehicle makers look for supply chains away from dominant producer China, Australia believes it can compete on price and is banking on what it says are its solid credentials in responsible production.

"It's the chemical steps that are attractive here in Australia," state mining minister Bill Johnston told Reuters, adding end users could be confident that processing was done to high environmental, social and governance (ESG) standards.

"The next step is to talk to international investors to move further down into chemical processing, either a precursor chemical plant or a cathode active material plant. We believe that we have a strong business case for investment."

Cathode active materials give batteries different characteristics depending on the types and combinations of metals used, such as lithium, nickel and cobalt.

Electric vehicle maker Tesla Inc said in June it expects to spend more than $1 billion a year on battery raw materials from Australia given the country's reliable mining industry and responsible production practices. It signed a deal in July to take nickel from BHP Group.

MAJOR PRODUCER

Australia produces half the world's lithium and is a significant nickel and copper supplier, while the world's global battery market is forecast to grow to $133-$151 billion by 2030 from $36 billion in 2020, according to a June Accenture report.

Australia does not yet produce battery chemicals, sending its raw materials to customers in Asia.

However, lithium hydroxide plants built by China's Tianqi Lithium and U.S.-based Albemarle Corp will open later this year, along with a BHP nickel sulphate plant.

The plant involving BASF is targeted for commissioning at the end of 2021 and the project will run until 2025, a spokesperson for the Future Battery Industries Cooperative Research Centre said.

BASF said in a statement to Reuters it was committed to the sustainability of the battery value chain, and noted success requires "a stable legal and political framework" as well as joint efforts across industry.

By integrating chemicals production closer to the raw materials, companies building plants can cut their freight costs by up to 30% and boost margins, according to Accenture. 

For Australia, it estimated diversified battery industries could contribute $7.4 billion a year to the economy and support nearly 35,000 jobs.

ESG CONCERN

Another string in Western Australia's ESG bow is the move by many big miners to shift to renewable energy in their operations, but the state may still face some headwinds as it touts its ESG credentials.

The legal destruction of culturally sacred rock shelters last year by Rio Tinto has put pressure on the state government to meet investor expectations when it releases a draft Aboriginal heritage bill due in coming months.

"ESG is a spectrum of sustainability issues," said Alison George of Regnan, the responsible investment arm of global investment manager Pendal Group which has around $92 billion under management.

"You might look at cultural heritage practices and Indigenous relations and ask whether WA is willing to keep ratcheting up its standards to meet escalating expectations," she said.

"We are in a situation where trust has been damaged and therefore heightened efforts are required."

(Reporting by Melanie Burton; editing by Richard Pullin)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
BASF SE 1.89% 62.94 End-of-day quote.-4.56%
BHP GROUP -4.16% 37.53 End-of-day quote.-11.55%
BHP GROUP PLC 2.65% 1892.6 End-of-day quote.-4.22%
TESLA, INC. 0.10% 730.91 End-of-day quote.3.47%
TIANQI LITHIUM CORPORATION -5.12% 108.5 End-of-day quote.176.29%
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Financials
Sales 2021 5 804 M 898 M 898 M
Net income 2021 727 M 112 M 112 M
Net Debt 2021 22 386 M 3 462 M 3 462 M
P/E ratio 2021 221x
Yield 2021 -
Capitalization 160 B 24 786 M 24 788 M
EV / Sales 2021 31,5x
EV / Sales 2022 19,0x
Nbr of Employees 1 644
Free-Float 64,6%
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Number of Analysts 8
Last Close Price 108,50 CNY
Average target price 112,12 CNY
Spread / Average Target 3,34%
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Wei Ping Jiang Chairman & President
Jun Zou Chief Financial Officer & Director
Jin Yan Chairman-Supervisory Board
Kun Lun Du Independent Director
Ying Pan Independent Director
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