Tonze subsidiary Xintai Material to partner with Xinhua Chemical for lithium hexafluorophosphate (LiPF6) production 08-15-2021

In late June 2021, Tonze, a leading enterprise in LiPF6, announced that its subsidiary company, Xintai Material, will establish a joint-investment company called Jiangsu Tianhua Material Technology Co., Ltd with Xinhua Chemical in order to expand its production plant to produce an additional 10 thousand tons of LiPF6 per year, along with electrolyte additives for batteries and other products, as well as 76 thousand tons of hydrochloric acid and 4 thousand tons of potassium fluoborite production.

Tonze's collaboration with Xinhua Chemical will be beneficial for both companies.

First, Xinhua Chemical is an enterprise which mainly engages in producing electrolyte additives for batteries and fluoride products. During the production process of LiPF6, a large amount of mixed acid will be created, and the mixed acid can be used as a raw material for other chemical products for Xinhua Chemical.

Second, Xintai Material can fully use the resources in the industrial park of Xinhua Chemical and apply known chemical processing techniques to LiPF6, in order to expand the production capacity of LiPF6, further improve the market shares of LiPF6 products, and to increase the supply of electrolyte additives.

Expanded LiPF6 production plan comes amid skyrocketing LiPF6 prices

Recent data shows that the price of LiPF6 has risen nearly four times since the second half of the year 2020. However, LiPF6 is difficult to produce at a high quality while still abiding by environmental regulations, and the material is also difficult to process. Furthermore, many key LiPF6 companies are currently competing to expand their production.

In fact, due to the increase in the price of LiFP6, a majority of Tonze's profits come from the sale of LiFP6, and in 2021, Tonze’s revenue and net profit increased by 143.88% and 321.58% respectively. The new joint-investment company, Jiangsu Tianhua Material Technology Co., Ltd, will be included in the consolidated financial statement of Tonze. The expansion of the productional plant to produce 10 thousand tons of additional LiPF6 annually along with electrolyte additives for batteries and other products will also become another way to earn profit.

Xintai Material and Xinhua Chemical collaboration becomes fully public

The collaboration between Xintai Material and Xinhua Chemical began to become apparent to the public in early April 2021. Some investors noticed in the assessment documents of environmental protection published on the website that Xintai Material and Xinhua Chemical planned to work together to expand projects for LiPF6 and hydrochloric acid, then reported this to the local regulatory authorities, saying that the two companies will cause horizontal competition, which will damage the profits of listed companies.

On April 9, the Shenzhen Stock Exchange sent a letter to Tonze about the issue regarding horizontal competition. According to Tonze’s reply on April 13, Tonze invested in an expanded production project for LiPF6, as well as in other projects on which Xintai Material planned to work with Xinhua Chemical. Due to the uncertainty of the project’s approval, Tonze did not announce these developments to the public.

For more information, please check our resources on China’s chemicals market.

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