In late June 2021, Tonze, a leading enterprise
in LiPF6, announced that its subsidiary company, Xintai Material, will
establish a joint-investment company called Jiangsu Tianhua Material Technology
Co., Ltd with Xinhua Chemical in order to expand its production plant to
produce an additional 10 thousand tons of LiPF6 per year, along with
electrolyte additives for batteries and other products, as well as 76 thousand
tons of hydrochloric acid and 4 thousand tons of potassium fluoborite
production.
Tonze's collaboration with Xinhua Chemical
will be beneficial for both companies.
First, Xinhua Chemical is an enterprise which
mainly engages in producing electrolyte additives for batteries and fluoride
products. During the production process of LiPF6, a large amount of mixed acid
will be created, and the mixed acid can be used as a raw material for other
chemical products for Xinhua Chemical.
Second, Xintai Material can fully use the
resources in the industrial park of Xinhua Chemical and apply known chemical
processing techniques to LiPF6, in order to expand the production capacity of
LiPF6, further improve the market shares of LiPF6 products, and to increase the
supply of electrolyte additives.
Expanded LiPF6 production plan comes amid skyrocketing LiPF6 prices
Recent data shows that the price of LiPF6 has
risen nearly four times since the second half of the year 2020. However, LiPF6
is difficult to produce at a high quality while still abiding by environmental
regulations, and the material is also difficult to process. Furthermore, many
key LiPF6 companies are currently competing to expand their production.
In fact, due to the increase in the price of
LiFP6, a majority of Tonze's profits come from the sale of LiFP6, and in 2021,
Tonze’s revenue and net profit increased by 143.88% and 321.58% respectively.
The new joint-investment company, Jiangsu Tianhua Material Technology Co., Ltd,
will be included in the consolidated financial statement of Tonze. The
expansion of the productional plant to produce 10 thousand tons of additional
LiPF6 annually along with electrolyte additives for batteries and other
products will also become another way to earn profit.
Xintai Material and Xinhua Chemical collaboration becomes fully public
The collaboration between Xintai Material and
Xinhua Chemical began to become apparent to the public in early April 2021.
Some investors noticed in the assessment documents of environmental protection
published on the website that Xintai Material and Xinhua Chemical planned to
work together to expand projects for LiPF6 and hydrochloric acid, then reported
this to the local regulatory authorities, saying that the two companies will
cause horizontal competition, which will damage the profits of listed
companies.
On April 9, the Shenzhen Stock Exchange sent a
letter to Tonze about the issue regarding horizontal competition. According to
Tonze’s reply on April 13, Tonze invested in an expanded production project for
LiPF6, as well as in other projects on which Xintai Material planned to work
with Xinhua Chemical. Due to the uncertainty of the project’s approval, Tonze
did not announce these developments to the public.
For more information, please check our resources
on China’s
chemicals market.
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