Lithium Iron Phosphate's Profit Rate Reaches 70%       

Lithium cobaltate, lithium nickelate, lithium manganate and lithium iron phosphate can all act as anode materials in Li-ion batteries. However, cobalt and nickel feature high costs, heavy pollution as well as active and explosive nature, neither lithium cobaltate nor lithium nickelate are good for batteries, while batteries with lithium manganate and lithium iron phosphate as anode materials have relatively better safety performance. Therefore, investment in battery industry currently is mainly concentrated in the latter two types of batteries. Of them, the production technology of lithium manganate is more mature, but that of lithium iron phosphate is safer and costs less. At present, the largest lithium cobaltate and lithium manganate manufacturer in China is CITIC Guoan Information Industry Co., Ltd. (SZ: 000839).
    Each electric car has about 200 to 300 kg of lithium batteries mounted, which in turn need 60 kg of lithium iron phosphate, so to produce 1 million electric cars every year will require 60 000 tons of lithium iron phosphate. However, the world's available production capacity is only 1 500 t/a (exclusive of China's capacity), which is a far cry from the demand. As a result, the profit rate of lithium iron phosphate is quickly soaring to 70% while that of batteries based on lithium iron phosphate also reaches 30% to 40%. In contrast, the profit rate of normal new-energy cars is only around 20% according to China Securities Daily.
    At present, mass production of lithium iron phosphate has been realized in the USA and Canada. As to China's production capacity, if seen from public statistics, it is 6 400 t/a, but the actual output is far below this figure and also the demand cannot be satisfied. Domestic enterprises like BYD Company Ltd., Tianjin STL Energy Technology Co. Ltd., Shenzhen Beiterui New Energy Resources Material Co., Ltd., Shenzhen Tianjiao Electronic Science Co., Ltd., Tianke Technology Co., Ltd., Pulead Technology Industry Co., Ltd. and Hunan Shanshan Advanced Material Co., Ltd. can provide lithium iron phosphate in small quantities.
    Shenzhen Beiterui and Shenzhen Tianjiao are both subsidiaries of China Baoan Group Co., Ltd. (SZ: 000009), which holds 55% and 75% of their shares respectively. Shenzhen Beiterui has a capacity of 1 500 t/a of lithium iron phosphate and 6 000 t/a of carbon cathode materials, while Shenzhen Tianjiao has a capacity of 1 000 t/a of ternary materials and plans to trial-produce 150 tons of lithium iron phosphate in 2009.
    Ningbo Shanshan Co., Ltd (SH: 600884) is a listed company with the widest business scope and the most complete industrial chain in the domestic battery material business. Among its subsidiaries, Hunan Shanshan Advanced Material Co., Ltd. (75% shareholding) has capacity to produce 500 t/a of lithium iron phosphate; Shanghai Shanshan Science and Technology Co., Ltd. (98.04% shareholding) has capacity to make 1 200 t/a of carbon cathode materials; and Dongguan Shanshan Battery Materials Co., Ltd, its wholly-owned subsidiary, has 3 500 t/a of electrolyte capacity, and is embarking on the development of lithium iron phosphate batteries.