Under the tight supply of lithium resources, the competition for lithium between car companies and battery companies has become increasingly fierce. Recently, it is reported that BYD has found six lithium mines in Africa and has reached an intention to purchase them. It is estimated that among the six lithium mines, the amount of ore with a lithium oxide grade of 2.5% has reached more than 25million tons, which can be converted into 1million tons of lithium carbonate.
BYD declined to comment. However, from the financial report data of BYD, BYD is also suffering from the rise in the price of raw materials. Throughout 2021, BYD's overall gross profit margin was 13.03%, down 6.36% year-on-year, the lowest since its listing. In order to stabilize the subsequent lithium salt supply, it is not surprising to buy ore.
In fact, since the development of new energy has entered the fast lane, from raw materials to battery manufacturers, and even vehicle manufacturers, the competition for lithium has not stopped.
According to the prediction of the International Energy Agency, if relying on the existing lithium production projects under construction, the world will face a demand gap of nearly 50% by 2030. The IEA also pointed out in the report "mineral demand for clean energy transformation" that the demand for lithium in 2040 may be 13 times higher than the current level. If the commercialization of all solid state batteries is fast, the growth is expected to reach 51 times.
Obviously, with the further vigorous demand for lithium resources and the gradual rise of lithium salt prices, in order to maintain the safety of lithium resource supply, there will only be more and more cases of car companies and battery companies buying lithium minerals in the future.
Battery enterprises increase income but not profit, and the downstream works for the upstream
The reason why BYD actively distributes lithium resources is closely related to the sharp rise in raw materials for new energy vehicles.
Lithium, known as "white oil", is one of the most critical raw materials for lithium batteries. Since 2021, with the global hot sales of new energy vehicles and the vigorous development of the energy storage industry, lithium prices have risen significantly. According to wind data, the price of battery grade lithium carbonate has risen from about 50000 yuan / ton at the end of 2020 to 470000-480000 yuan / ton today. In March this year, it once exceeded 500000 yuan / ton, an increase of nearly 10 times in just one year.
For the future trend, Galaxy Securities said that the increase in the operating rate of new energy vehicles at the downstream terminals is expected to drive the replenishment of lithium salt in the lithium battery industry chain as a whole, or drive a new round of lithium price rise.
The rising price of raw materials has directly led to the prominent profit differentiation between the upstream and downstream of the lithium battery industry chain. The upstream lithium resource enterprises have made a lot of money, accounting for the majority of the profits in the current lithium battery market; However, the midstream lithium battery manufacturers and downstream new energy vehicle manufacturers have greatly squeezed their profit margins, falling into an embarrassing situation of "increasing income without increasing profits".
Benefiting from the "simultaneous rise in volume and price" of lithium products, since last year, a number of lithium battery upstream enterprises have achieved great results. Taking Ganfeng lithium (002460.sz) and Tianqi lithium (002466.sz), the two leading lithium enterprises in China, as examples, the growth rate of net profit attributable to parent company in 2021 was 410% and 213% respectively, and the first quarter report of this year was as high as 640% and 1443%. In the first quarter, the net profit attributable to the parent company of several lithium mining stocks increased by 5 times or even 10 times. The first quarter profits of Tianqi lithium, Yahua group (002497.sz), Shengxin lithium energy (002240.sz) and China mineral resources (002738.sz) exceeded that of last year.
In contrast, the performance of many midstream power battery enterprises is not optimistic. From the data of the first quarter, although the revenue growth of Ningde times (300750.sz), GuoXuan high tech (002074.sz), Funeng Technology (688567.sh) and Yiwei lithium energy (300014.sz) were all above 120% year-on-year, the net profit attributable to the parent company decreased by 20%-40% year-on-year.
Taking Ningde times as an example, its operating revenue in the first quarter increased by 154% year-on-year, but its net profit fell by 24% year-on-year, and the company's gross profit margin fell sharply by 12 percentage points to 14.48%. The company said that one of the reasons was that the price of raw materials such as lithium carbonate rose more than expected. Zeng Yuqun, chairman of Ningde times, even bluntly said at the investor conference call that there was a factor of speculation in the rise of lithium prices.
Chuancai Securities said that the profit space of battery grade lithium carbonate has been compressed, the profits are further transferred to the resource side, and the profits of smelters in the middle reaches of the industry have been further compressed. Under the background of the rising concentrate, the midstream cost rises, and the profit differentiation between integrated enterprises and processing enterprises will become more and more serious.
The pressure of rising costs is also transmitted to downstream new energy vehicles. BYD (002594.sz), with the dual identity of battery manufacturer and vehicle manufacturer, showed a situation of "increasing revenue without increasing profit" in the financial report in 2021. The annual automobile sales volume was about 740000, an increase of 73% year-on-year; The operating revenue was RMB 216.142 billion, a year-on-year increase of 38%; The net profit attributable to the parent company was RMB 3.045 billion, a year-on-year decrease of 28%.
On a quarterly basis, in the fourth quarter of last year, when the operating income increased by 16.6 billion yuan compared with the third quarter, the net profit attributable to the parent decreased by 600million yuan. The fourth quarter of last year was the time when the price of lithium carbonate rose most sharply.
The increase in cost directly leads to the decrease in gross profit margin. According to the annual report, BYD's overall gross profit margin was 13.03% in 2021, a decrease of 6.36 percentage points compared with 2020, a new low since its listing. Among them, the gross profit margin of automobiles and related products was 17.39%, a year-on-year decrease of 7.81 percentage points; The gross profit margin of battery business decreased by more than 8 percentage points to 11.94%. In the first quarter of this year, BYD's overall gross profit margin further fell to 12.4%.
From the perspective of the secondary market, BYD's share price has fluctuated all the way down since it hit a historical high of closing price of 319 yuan / share at the end of October 2021. It has started to rise since May this year. As of June 1, 2022, its closing price was 300 yuan / share, with a total market value of 873.3 billion yuan.
The battle for "white oil" is intensifying
The tight supply and demand of lithium resources also directly affected the downstream auto enterprises. Since this year, China's new energy vehicle market has experienced three obvious price rises.
In March 2022 alone, nearly 20 new energy vehicle enterprises announced price increases, involving nearly 40 models. Tesla has raised its price three times in a week, with a single increase of up to 20000 yuan; The highest price increase of all models of Zero run car C11 was 30000 yuan, making it the new energy vehicle enterprise with the highest single increase. In the price increase announcement, auto companies without exception expressed their helplessness of being unable to bear the rising trend of raw materials.
According to the statistics of the Institute of lithium batteries for Advanced Engineering (GGII), the average market prices of the four main materials in ternary China, nickel cathode material, lithium iron phosphate cathode material, electrolyte and cathode material, at the end of the first quarter of this year, compared with the prices at the beginning of last year, rose by 171%, 222%, 98% and 18% respectively. In the first quarter of this year, the average price of battery grade lithium carbonate soared from about 250000 yuan / ton to more than 510000 yuan / ton, while the average price in the same period last year was less than 50000 yuan / ton.
Xuhaidong, deputy chief engineer of the China Association of automobile manufacturers, said to a traveler, "by analyzing the relevant mineral resources and mineral extraction cycle, it can be basically determined that there will be a continuous price rise for new energy vehicles in the next 2-3 years."
In order to stabilize lithium supply, automobile enterprises and battery enterprises should purchase lithium ore directly across upstream companies. Since the beginning of this year, the war of seizing lithium ore has become increasingly fierce, and even sky high price auctions have occurred.
On May 16, Chengdu Xingneng auctioned its 54.2857% stake in Yajiang snowy Mining Development Co., Ltd. (hereinafter referred to as snowy mining) for bankruptcy liquidation. The starting price was 3.3529 million yuan, which attracted 21 enterprises to bid 3448 times. Finally, it was traded at the price of 2billion yuan on May 21, which means that the auction value has increased 597 times.
Behind the snowway auction, which lasted for 6 days and attracted nearly a million onlookers, was the exploration right of a super large lithium mine, delanongba lithium mine. The mine is located in the methylkalimanite mining area in the northeast of Yajiang County, Ganzi Prefecture, Sichuan Province, with a reserve of 24.92 million tons and a lithium oxide resource of 293200 tons (about 725100 tons of LCE).
Lce is the abbreviation of lithium carbonate equivalent, which refers to the equivalent amount of lithium carbonate that can be actually produced in solid / liquid lithium ore. Because lithium is a very active metal, it usually exists as a compound. Due to the different lithium content, it is finally reflected in the economic data, which is generally converted into LEC.
Considering the Commission of 60million yuan and the debt of 870million yuan, the actual auction cost of snowway mining reached 2.93 billion yuan. Based on this, the purchase price of a single ton of LCE was about 7443 yuan, setting a new high for the consideration of the lithium transaction object.
Not long ago, Pilbara, an Australian lithium miner, held the first lithium concentrate auction in 2022 on April 27. The auction price was $5650 / ton, and the auction totaled 5000 tons. It is estimated that the cost of lithium carbonate is about 380000 Yuan / ton in combination with the freight of 90 dollars / ton.
The sky high auction also reflects the unprecedented fierce competition for lithium resources.
According to the USGS data of the US Geological Survey, by the end of 2020, the global lithium resources were about 86million tons, of which the lithium resources in the "lithium triangle" region of South America (high-altitude lakes and salt marshes at the junction of Argentina, Chile and Bolivia) accounted for nearly 60%, while China's reserves accounted for only 6%.
Specifically, more than 80% of domestic lithium resources are stored in salt lakes, distributed in Qinghai, Tibet and other provinces, while ore resources are concentrated in Sichuan, Jiangxi, Hunan, Xinjiang and other provinces. Among them, the lepidolite ore is concentrated in Yichun, Jiangxi Province, while the spodumene ore is mainly distributed in Sichuan, accounting for more than 50% of the national lithium ore. It is concentrated in the two major ore fields, namely, the methylka in Ganzi Prefecture and the Kerin in Aba Prefecture.
More importantly, China's lithium ores are of poor quality and difficult to mine. Taking Sichuan as an example, yanxianwei, general manager of Tianyi lithium, said to a traveler: "there is great potential, but there is basically no hope of mining. The lithium mine is located in the holy mountain of ethnic minorities, so it is difficult to mine."
Yichun, known as the "lithium capital of Asia", is also not optimistic. Yanxianwei said that the exploitation of lithium resources in Yichun is actually very small. The lithium battery enterprises attached to Yichun still mainly come from abroad.
However, since the beginning of this year, driven by the head battery enterprises, the mining progress of domestic lithium resources has been significantly accelerated. According to incomplete statistics of one passenger trip, there were more than 10 lithium development projects in the first quarter of 2022. The development types involved lithium extraction from Salt Lake, mica and spodumene. The participants included power battery enterprises, lithium salt enterprises, etc. After entering the second quarter, the battle for lithium ore became more intense.
In April, 2022, Yichun times, a holding subsidiary of Ningde times, successfully won the exploration right of ceramic soil (including lithium) in the zhenkouli Fengxin jianxiawo mining area of Yifeng County, Jiangxi Province at a price of 865million yuan; On May 20, Yichun GuoXuan Mining Co., Ltd. won the general survey and exploration right of porcelain clay (lithium bearing) ore in Shuinan section of Keshili mining area, Yifeng County, Jiangxi Province at a price of 460million yuan.
In the context of seizing lithium mines, BYD's proposed purchase of six lithium mines in Africa is just the tip of the iceberg for the new energy industry to seize lithium resources. In the future, there will only be more and more cases of car companies and battery companies buying lithium mines, even from enterprise competition to national competition.
As the "father of lithium battery" gudinav warned after winning the Nobel Prize in chemistry in 2019, "lithium resources are no less important than strategic resources such as oil. Once there is a bottleneck in the exploitation of lithium resources, it may become the fuse of war like oil."
By Li Yang and Wang Ying
Editor / Zhao Cheng, Wang Lifeng