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On July 5, Cailian Press (Reporter Wu Chao) announced that Nanjing Public Utilities Development (000421.SZ) signed a "Strategic Cooperation Agreement" with Ganfeng Lithium (002460.SZ) and Nanjing Environmental Group Co., Ltd., planning to invest in and build a 300,000 ton waste battery recycling base in Jiangsu Province. As a comprehensive state-owned enterprise in Nanjing, this is the first time that Nanjing Public Utilities Development has entered the field of waste battery recycling and lithium battery application. In addition, the scale of the recycling base ranks among the top in the country and has exceeded the existing scale of battery recycling business by Ganfeng Lithium.

According to an insider in the new energy industry who spoke to Cailian Press, considering the average lifespan of power batteries for new energy vehicles, the first outbreak of a wave of battery retirement is expected to arrive in the next few years. Especially according to the regulations of the Ministry of Industry and Information Technology, as of 2016, passenger vehicle production companies provide a quality guarantee of eight years or 0.12 million kilometers for core components such as batteries and motors. This year marks the first batch of the end of that protection period. Therefore, the demand for power battery recycling will rapidly increase, leading to a huge market.

Cailian Press noted that many companies have accelerated their layout of battery recycling businesses this year. Many of them have been actively promoted by automakers, including Gem Co., Ltd., which has reached strategic cooperation on waste battery recycling with Guangzhou Automobile Group, Dongfeng Automobile, etc., Volvo Automobile, which has signed a memorandum of strategic cooperation with Contemporary Amperex Technology, Chongqing Changan Automobile, which has announced the establishment of a joint venture with Miracle Automation Engineering, and others.

According to this announcement, the three parties plan to establish a joint venture company to invest in and build a 300,000 ton waste battery recycling base in Jiangsu Province. The preliminary plan includes a first-phase scale of 0.03 million tons, a second-phase scale of 0.07 million tons, and a third-phase scale of 0.2 million tons, with the production capacity plan subject to adjustment based on market conditions. The total investment for the project is expected to be 1 billion yuan.

In addition, the three parties confirm and agree that their cooperation in the waste battery recycling project is exclusive, and they are the only partners in the field of waste battery recycling in Jiangsu Province.

Furthermore, the three parties and their subsidiaries will, under equal conditions, participate in the strategic cooperation party's leading projects in accordance with market-oriented mechanisms, and give priority to using the strategic cooperation party's products or services, while actively providing competitive products or services for the strategic cooperation party.

According to Cailian Press, Nanjing Public Utilities Development has not been involved in waste battery recycling and lithium battery application-related business in the past. Although Nanjing Public Utilities Development has cooperated with external companies to establish the Nanjing Zhijing Rong New Energy Technology Co., Ltd. (referred to as "Nanjing Zhijing") in 2022 to invest in the new energy vehicle battery testing industry, according to Tianyancha, Nanjing Zhijing's 2023 Industrial and Commercial Annual Report shows that there is only one employee, and Nanjing Public Utilities Development has not disclosed any actual business operations of Nanjing Zhijing.

However, as one of the leading companies in China's lithium industry, Ganfeng Lithium has rich experience in battery recycling. According to the performance briefing held by Ganfeng Lithium this year, the company has established multiple dismantling and recycling bases in Xin Yu, Ganzhou, Sichuan Dazhou and other places. The comprehensive recycling and processing capacity for retired lithium-ion batteries and metal scrap has reached 0.2 million tons, making it one of the top three companies in the battery recycling industry in China by recycling capacity of lithium iron phosphate batteries and waste materials.

Therefore, the planned 300,000-ton waste battery recycling base built by the three parties in Jiangsu Province has already exceeded the existing scale of Ganfeng Lithium's battery recycling business. According to data from CCID Consulting, the cumulative amount of power battery recycling in China in 2023 will exceed 0.55 million tons.

As for the future expansion plan for the recycling business, Ganfeng Lithium also stated that it is currently planning to build a project with an annual production capacity of 0.02 million tons of lithium carbonate and 0.08 million tons of lithium iron phosphate, which is expected to be completed and put into operation gradually from the second half of 2024. In the company's longer-term production capacity plan, the proportion of lithium battery recycling and lithium extraction capacity to the company's total extraction capacity will reach 30%.