China increases efforts to consolidate its dominance in clean energy technology

Mohammed bin Masoud – Dammam – streke_opvolg

Three Chinese companies specializing in electric car batteries and materials are attracting investors for more than $ 10 billion in new financing as the country consolidates its dominance of global clean technology supply chains.

China’s Contemporary Imprex technology, the world’s largest battery maker, last week completed its second largest transaction in global capital markets this year, while a wave of battery and rare earth companies scrambled to meet rising demand.

The total money raised by three Chinese groups – Cattel, Tianqi Lithium and Huayu Cobalt – exceeds the hundreds of millions of dollars that Washington and US allies, including Australia and South Korea, have spent undermining China’s lead in this sector.

“China is trying to position itself at the forefront of clean technology devices because it is the lowest-cost provider with the highest market share,” said Neil Beveridge, senior analyst at Bernstein in Hong Kong. “This is a major geostrategic competition between China and the West,” he added.

Factories in China account for about three-quarters of global electric car battery production and control 90 percent of the market share for processing rare earth elements – the oxides, metals and magnets used in batteries – a level of dominance similar to theirs in solar power. industry.
Cattell, a major supplier to Tesla and local Chinese carmakers such as Geely, last week launched a private placement of Rmb45 billion ($ 6.7 billion) at Rmb410 per share. By adding the recent massive stock sale, Cattell, according to Financial Times calculations and Refinitiv data, has raised about $ 13 billion since its 2018 listing on the Shenzhen Stock Exchange.

Foreign investors wanted to participate. JPMorgan, Barclays, Morgan Stanley, Macquarie and HSBC each acquired a portion of the offered shares, representing about 32 percent.

Shenzhen-listed Tianqi Lithium, one of the world’s largest manufacturers of chemical lithium for electric car batteries, aims to raise between $ 1 billion and $ 2 billion in a secondary listing in Hong Kong, according to an investor close to the company.

According to Dealogic, the fundraiser this year will be the largest on the Hong Kong Stock Exchange, even on the lowest scale. Tianqi’s shares on the mainland have risen more than 21 percent since early June.

Listed in Hong Kong, Huayu Cobalt, another major Chinese raw material supplier, plans to raise up to 17.7 billion RMB through a private placement. Most of the money will be used to expand production in a joint venture in Indonesia, where it processes nickel, an important material for electric car batteries.

More than 90 percent of the world’s battery lithium is produced by refineries in China, which also process the vast majority of cobalt, nickel and other important battery materials, according to Trafigura.

The West was slow to respond to China’s market dominance. This month, the U.S. Department of Defense signed a $ 120 million agreement with Australia-listed Linas Rare Earths to build one of the U.S.’s first heavy rare earth element separation facilities. In February, the Australian government provided a $ 100 million loan to Hastings Technology Materials to develop a rare earth mine and refinery in Western Australia.

As the demand for electric vehicles grows, global battery capacity is expected to increase by 40 percent annually until 2025 to 3,252 gigawatt hours, from 823 gigawatt hours in 2021, according to Bernstein’s forecast. China’s share of the electric car battery market will decline slightly, with the United States and Europe providing generous subsidies to build factories closer to car manufacturers, but it is expected to remain at around two-thirds by 2025.

In contrast, the European footprint is expected to expand from 15 percent to 20 percent, and the United States from 8 percent to 12 percent. Cattel is expected to maintain its global market share of 20% until 2025.
However, China’s cost advantage is ready to improve. The unit cost of factories built in China is about $ 60 million / GWh, thanks to their size. But it will shrink further in the coming years to about $ 50 million / GWh as the size of the factories expands rapidly.

That compares with a world average of about $ 78 million / GWh over the next 10 years. New European battery plants already cost $ 120 million / GWh.
Ross Gregory of consulting firm New Electric Partners notes that competitors’ concerns about China extend beyond geopolitical risks to the problems of competing with the country’s massive domestic demand for electric car batteries.

“It’s not just a fear that China could act horribly, it’s just the fact that it has a huge domestic demand,” he said.

South Korean companies, including rivals Catel, LG, SK and Samsung, are racing to reduce China’s dependence on critical battery materials, which today is more than 60 percent.

But as a sign of the attractiveness of cheap batteries in China, the Kia brand, a subsidiary of Korean car group Hyundai, plans to use Catel batteries for its new electric car model, which is the first entry of non-Korean-made batteries in the Korean market.

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