Finance Association, Feb. 7 (Reporter Zeng Chuchu) Judging from the long-term planned annual production capacity of 137,000 tons of lithium salt, the low self-supply rate of lithium ore raw materials is a “pain point” of Shengxin Lithium Energy (002240.SZ). Although the company has laid out lithium resources, it may be difficult to rescue fires due to remote water. The company revealed today that it has reached an agreement with Pilbara to outsource more than 380,000 tons of lithium concentrate.

Shengxin Lithium Energy announced today that its wholly-owned subsidiary Shengwei International has signed a “Lithium Concentrate Offtake Agreement” with Pilgangoora (“P Mine”), a wholly-owned subsidiary of Australian lithium producer Pilbara. The company will purchase spodumene concentrate from Pilgangoora from 2024 to 2026.

According to the announcement disclosed in the agreement, P Mine will supply 85,000 tons of spodumene concentrate to Shengwei International in 2024, 150,000 tons of spodumene concentrate in 2025, and 150,000 tons of spodumene concentrate in 2026; the product price is calculated and determined according to the pricing formula agreed by the two parties.

Based on the conversion of about 8 tons of lithium concentrate to produce 1 ton of lithium carbonate, it is estimated that P mine will supply lithium concentrate to meet Shengxin Lithium Energy's production of 11,000 tons, 19,000 tons, and 19,000 tons of lithium carbonate in 2024, 2025, and 2026, respectively.

According to statistics publicly disclosed by the company, Shengxin Lithium Energy has now built a lithium salt production capacity of 77,000 tons, including Deyang Zhiyuan Lithium's annual production capacity of 42,000 tons, Suining Shengnian's production capacity of 30,000 tons, and Shengxin Lithium Metal's first phase of lithium salt production capacity of 5,000 tons, which began trial production in November last year.

In addition, Shengxin Lithium Energy has planned a lithium hydroxide production capacity of 50,000 tons/year and a lithium carbonate production capacity of 10,000 tons/year in Indonesia. According to the company's statement on the interactive communication platform in January, various tasks at Shengtuo Indonesia are currently progressing in an orderly manner, and it is expected to be completed and put into operation in the first half of 2024. According to this estimate, the company will have an annual production capacity of 137,000 tons of lithium salt in 2024, which will require 1.1 million tons of lithium concentrate raw materials.

Shengxin Lithium Energy also mentioned in today's announcement that with the rapid growth of the company's production capacity, demand for upstream lithium ore raw materials is gradually increasing. Pilbara is a world-renowned lithium producer. By signing a lithium concentrate subscription agreement with its wholly-owned subsidiary Pilgangoora, it is conducive to expanding the company's raw material supply channels for lithium salt products, further locking in upstream high-quality lithium concentrate resources, and ensuring the stability of raw material supply.

In fact, the low self-supply rate of lithium ore raw materials has always been a “pain point” for Shengxin Lithium Energy. With the expansion of lithium salt production capacity, Shengxin Lithium has been seeking the supply of lithium resources through equity participation, agreement supply, etc., and has successively laid out the Sichuan Yelonggou lithium polymetallic mine, the Sabistar lithium and tantalum mine in Zimbabwe, SDLA Salt Lake in Argentina (independent operation rights), and Huirong Mining, which participated in the shares, has 1 prospecting right, Mt Cattlin and Manono underwriting.

Shengxin Lithium Energy also continues to allocate its own lithium resources. In December of last year, the wholly-owned subsidiary of Shengxin Lithium Energy also increased its capital in Qicheng Mining. Huirong Mining, a subsidiary of Qicheng Mining, holds prospecting rights at the Mu Wool Mine in Yajiang County, Sichuan Province. According to data disclosed by the company, the estimated proven resource situation of the mine is currently 61.95 million tons (detection+control+inference) of ore resources, 990,000 tons of metal oxide, with an average grade of 1.62%.

However, at the same time, the company indicated that the Muclene lithium mine is currently undergoing procedures related to the transfer of prospecting rights to mining rights, and there is uncertainty about whether it can be successfully processed.