Another major player joins the lithium battery sector: Zhongzhong Mining partners with Wanhua Chemical to invest in lithium salt project

Securities Daily reporter Ma Yuwei

On March 24, Dazhong Mining Co., Ltd. (hereinafter referred to as “Dazhong Mining”) announced that the company plans to sign a tripartite “Investment Agreement” with the Management Committee of Meishan High-tech Industrial Park (hereinafter referred to as “Meishan High-tech Zone Management Committee”) and Wanhua Chemical (Sichuan) Battery Materials Technology Co., Ltd. (hereinafter referred to as “Wanhua Battery Materials Company”). The three parties will cooperate to invest in the construction of a “200,000 tons per year lithium salt project” in Meishan High-tech Industrial Park, further improving the lithium battery industrial chain layout and seizing the development opportunity of the new energy industry.

A relevant person in charge of Dazhong Mining told Securities Daily reporters: “This cooperation will help our company achieve efficient utilization of resource synergy, further build a complete closed loop of ‘resources - supporting - market’, and lay a solid foundation for the development of the lithium battery industry.”

Cross-industry Marriage to Build a New High Ground for Lithium Battery Materials

In recent years, while firmly establishing its iron ore main business, Dazhong Mining has concentrated its advantageous resources to promote the construction and development of key projects such as lithium mines.

Wanhua Battery Materials Company is a holding subsidiary of Wanhua Chemical Group Co., Ltd. (hereinafter referred to as “Wanhua Chemical”). As a leading global chemical enterprise, Wanhua Chemical is continuously accelerating the construction of battery material projects such as lithium iron phosphate, actively creating its second growth curve. This cooperation is also an important measure for Wanhua to improve its upstream layout of the battery material industrial chain.

The announcement shows that the overall planned capacity of the project is 200,000 tons of lithium salt, divided into three phases: Phase I with an annual output of 30,000 tons, Phase II with an annual output of 70,000 tons, and a long-term plan for an annual output of 100,000 tons. Among them, the total investment scale of Phase I and Phase II projects is 2.2 billion yuan, and Phase III will be funded by the cash flow generated by Phases I and II.

To ensure the smooth implementation of the project, Dazhong Mining plans to sign a “Joint Venture Agreement” with Wanhua Battery Materials Company to jointly invest in the establishment of a joint venture company as the investment and construction主体 for the aforementioned Phase I “30,000 tons per year lithium salt project.” The registered capital of the joint venture company is 300 million yuan, of which Dazhong Mining will contribute 240 million yuan in cash (holding 80%), and Wanhua Battery Materials Company will contribute 60 million yuan in cash (holding 20%). Both parties have clear rights and responsibilities and complementary advantages, providing strong support for the project’s implementation.

From the perspective of collaborative synergy, Dazhong Mining has solid lithium resource endowments, and Wanhua Chemical can provide stable downstream demand support for the joint venture company. At the same time, the project is located within the Wanhua Chemical Sichuan Industrial Park in Meishan High-tech Industrial Park, allowing it to directly enjoy the park’s mature supporting facilities and equal preferential policies, significantly reducing project construction and operating costs, shortening the construction period, and enhancing the overall competitiveness of the project.

“This cooperation leverages the mature supporting facilities of Wanhua Chemical Sichuan Industrial Park to effectively shorten the project construction period and reduce operating costs. At the same time, it establishes a stable supply-demand relationship with Wanhua Battery Materials Company. According to the agreement, 50% of the lithium salt products from the joint venture company will be supplied to the Wanhua system as a priority, which not only solves the sales channel problem for lithium salt products but also effectively resists the risk of price fluctuations in the lithium salt market, forming a stable ecological circle of ‘resources - production - market’, thereby enhancing the project’s risk resistance capability and helping Dazhong Mining consolidate its competitive position in the industry,” a person close to Dazhong Mining told Securities Daily reporters.

The aforementioned relevant person in charge of Dazhong Mining further stated that the construction of this lithium salt project will promote the company’s lithium battery industry to extend from upstream mining selection to midstream lithium salt smelting, constructing a complete industrial chain layout of “lithium ore mining selection - lithium salt processing,” achieving full-process independent control of lithium resources from raw materials to finished products, significantly enhancing the added value of lithium resource products and strengthening overall profitability.

Resource Empowerment Accelerates the Expansion of Lithium Mine Territory

Currently, the global new energy industry maintains a sustained and rapid development trend, with lithium resources, as a key raw material for new energy batteries, becoming increasingly strategically important. To effectively respond to the cyclical risks of the iron ore industry, Dazhong Mining is actively laying out the lithium mining new energy industry, accelerating the development and construction of the Hunan Jijiao Mountain Lithium Mine and Sichuan Jiada Lithium Mine, and establishing a new pattern of dual-wheel drive and collaborative development in its business system to enhance the company’s risk resistance and sustainable development capabilities.

It is reported that the first mining area of the Sichuan Jiada Lithium Mine under Dazhong Mining (only accounting for one-tenth of the exploration rights area) has a registered resource amount of 1.4842 million tons of lithium carbonate equivalent, with a first-phase raw ore mining scale of 2.6 million tons per year. According to industry technical levels, after reaching production, the annual raw ore mined can produce about 50,000 tons of lithium carbonate. Notably, there is significant potential for resource increase outside the first mining area of Sichuan Jiada Lithium Mine, providing solid support for the company’s long-term stable supply of lithium raw materials.

Another core lithium mine project of Dazhong Mining, the Hunan Jijiao Mountain Lithium Mine, has a lithium resource quantity of 490 million tons approved and registered by the Ministry of Natural Resources, equivalent to about 3.2443 million tons of lithium carbonate; the approved open-pit mining scale by the Ministry of Natural Resources is 20 million tons per year; the project mining scale approved by the Hunan Provincial Development and Reform Commission is also 20 million tons per year; the registered service period of the tailings pond is 15.6 years. Based on industry experience and Dazhong Mining’s experiments, the annual mining of 20 million tons of raw ore can produce 80,000 tons of lithium carbonate, demonstrating significant resource endowment advantages.

Focusing on lithium mining and the new energy track, Dazhong Mining is working to build a dual-core growth engine of “iron ore + lithium ore” for collaborative development. It is understood that in terms of resource layout, the company is accelerating the construction of in-production lithium mine projects and the process of converting exploration rights to mining rights, selecting high-quality mineral resources with a global perspective, and continuously expanding resource reserve scale and optimizing resource allocation structure through strategic investment and professional integration, thereby solidifying the core barriers for industrial development. In the field of technological innovation, the company focuses on high-efficient comprehensive utilization of minerals and breakthroughs in new generation smelting processes, deepening the integration of production, education, and research, and fully promoting breakthroughs in key core technologies and their industrial application.

The aforementioned relevant person in charge of Dazhong Mining stated that the construction of this lithium salt project will effectively activate the company’s lithium resource reserves, realizing the transformation of resource advantages into industrial advantages and economic advantages. At the same time, leveraging Wanhua Chemical’s research and development and technological advantages in the chemical field will lay a foundation for subsequent expansion into downstream new energy customers and extending the industrial chain downstream, aligning with the development trend of the new energy industry and cultivating new momentum for the company’s long-term growth.