Since late September, Chinese Guangzhou Tinci Materials Technology Co., Ltd. (Tinci) has taken several actions that indicate it is attempting to maneuver itself into the supply chain of Apple and BMW. According to independent China market research firm CCM, if Tinci is successful, it is possible it could establish itself as China’s leading supplier of Li-ion battery electrolyte.
The first signs that Tinci was making a move to strengthen its Li-ion battery electrolyte business came on September 23rd, when the company announced that it had completed a capital increase for its wholly-owned subsidiary Jiujiang Tinci Materials Technology Co., Ltd. (Jiujiang Tinci).
Jiujiang Tinci is mainly engaged in the R&D, production and operation of Li-ion battery electrolyte (6,000 t/a) and crystal lithium hexafluorophosphate (crystal LiPF6) (2,000 t/a). Through this capital increase, Jiujiang Tinci’s registered capital increased to USD32.52 million (RMB200 million) from USD16.26 million (RMB100 million).
A week later, on September 30th, Tinci de-listed another of its wholly-owned subsidiaries, Suichang Tinci Materials Technology Co., Ltd. (Suichang Tinci). Officials at Tinci stated that the decision to de-list Suichang Tinci was made in accordance with the company's overall strategy focusing on the Li-ion battery electrolyte business, and will help Tinci integrate and optimize its resource allocation, reduce costs in production and management, and improve its operating benefits.
Meanwhile, also on September 30th, it emerged that Tinci was planning to make a private offering to raise further funds. According to the plan, Tinci will issue 8.18 million shares at most at approximately USD5.27 (RMB32.40) per share. In total, this offering should raise an extra USD43.09 million (RMB265 million).
CCM has learned that Tinci plans to use these funds to buy out Dongguan Kaixin Battery Material Co., Ltd. (Dongguan Kaixin) for no more than USD32.52 million (RMB200 million), and also USD7.97 million (RMB49 million) in the construction of a new 6,000 t/a liquid LiPF6 project. This move suggests a decisive pivoting of Tinci’s business towards the Li-ion battery electrolyte industry.
Moreover, according to CCM’s sources, Tinci is not only, or even primarily interested in acquiring Dongguan Kaixin to expand its Li-ion battery electrolyte business. Rather, Tinci is very keen to gain access to Dongguan Kaixin’s client base.
Competition in China’s Li-ion battery electrolyte industry focuses on the quality, not necessarily the quantity, of clients. This is because, for these Li-ion battery electrolyte manufacturers, gaining a quality client not only generates revenue, but also allows the company to learn from its client’s superior technical and R&D capabilities.
At present, Tinci’s client base is still mainly made up of domestic Chinese enterprises. However, if it succeeds in acquiring Dongguan Kaixin, Tinci will enter the supply chain of Amperex Technology Limited (ATL).
Not only is ATL the major supplier of Li-ion batteries for Apple Inc.’s digital products, it is also currently co-operating with BMW in a project to develop a power Li-ion battery for automobiles. In the future, ATL is widely expected to become BMW’s supplier for its alternative energy automobile business. Entering the supply chain of such prestigious clients will surely help propel Tinci up the technology ladder, expand its business in both domestic and overseas markets, and possibly even allow it to seize the title of China’s leading Li-ion battery electrolyte supplier.
Tinci also plans to increase its production capacity of LiPF6 in the near future. According to a statement released by Tinci, the liquid LiPF6 project is designed mainly to deal with the rapid development in the alternative energy automobile industry and meet fast-growing downstream demand. The construction period for this liquid LiPF6 project is about 1.5 years and construction should be completed in 2016.
Once completed, the production capacity of this project will be 6,000t/a of liquid LiPF6, which is the equivalent of 2,000t/a of crystal LiPF6. This will double Tinci’s total capacity, which currently stands at 2,000 t/a of crystal LiPF6.
China’s LiPF6 market is currently suffering from overcapacity, but the rapid development of the alternative energy automobile industry is expected to drive up demand for Li-ion battery electrolyte. According to CCM, LiPF6 supply and demand in the LiPF6 market should balance out by 2015.
- This article was provided by CCM, a leading provider of data and business intelligence on China’s chemicals market. CCM has launched China Li-ion Battery E-News, a new e-journal dedicated to analyzing all the latest news and trends in China’s Li-ion battery industry. For more information on CCM and China Li-ion Battery E-News, please visit www.cnchemicals.com or contact firstname.lastname@example.org
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