Cathode maker Rongbai invests in GEM and secures recycled material

The cathode producer Rongbai Technology acquires 18% of the shares in a subsidiary of GEM, one of the world's largest battery recyclers as well as a leading battery material company. The companies announce they will cooperate in battery recycling and sourcing of nickel.

Rongbai is like GEM a producer of cathode materials and has for several years bought precursor from GEM. Both companies have had strong positions in high nickel material such as NCA and NMC811 precursors and cathode materials. Rongbai has alongside Ecopro, Samsung and CATL been one of GEM's most important customers.

Through the agreement the partners will jointly build a strategic cooperation throughout the entire value chain from nickel-cobalt mining, recycling, precursor manufacturing and cathode material production. As part of the agreement Wuhan Power Battery Regeneration Technology Co, the subsidiary Rongbai now will invest in, will supply 26% of the material products it produces to Rongbai Technology at a "fair price". Between 2022 to 2026 Rongbai is expected to buy 300,000 tonnes of precursor.

Rongbai will also buy an 8% share in the primary nickel producer Indonesia Qingmeibang which GEM owns together with Huayou Cobalt, Brunp and Tsingshan Special Steel, IMIP, and Banhe Xingye.

Rongbai is also the owner of South Korean EMT, a cathode producer which has a small recycling line and which also supplied recycled material through TMC in South Korea. It has also a supply agreement with Huyaou Cobalt, TMC's previous owner, to buy as much as 180,000 tonnes of precursor over 4 years. Huyaou Cobalt is just like GEM a large recycler, although small in comparison to its primary material business, and was alongside GEM one of the first five certified companies for recycling of EV batteries in 2018.

Important take-aways for western players is the high level of integration by companies which today are leaders in high nickel precursors and cathode material. Both GEM and Rongbai were among the first companies in the world to launch NMC811 cathode material. This translates into several activities upstream such as the investments in Indonesia, long term agreements with other leading nickel suppliers and an active sourcing of nickel containing recyclables. This is also why we have argued that companies like GEM, and now also Rongbai, will be better positioned to meet the requirements in the EU Battery Regulation than any battery material startup as far as batteries based on lithium, cobalt and nickel are concerned.

What's interesting is that GEM and Rongbai not only are among the leaders in high nickel material. They are both also among the first, and although still small, the largest producers of sodium-ion materials in China, supplying material to CATL.

Reuters in China covers the deal here.