Yunnan Energy New Material Co. Ltd. is ramping up the pace of its global expansion. It is investing more than CNY 6 billion in adding production capacity in the US while capturing a CNY 4.6 billion order from Europe. Yunnan Energy New Material is a major Chinese supplier for separator films used in lithium batteries.

A New Plant in Ohio Worth Over CNY 6 Billion

On May 5, Yunnan Energy New Material announced that its subsidiary SEMCORP Manufacturing USA LLC will build a new production plant in the US. The plant will be placed in Sidney, a city in the state of Ohio. Its products will be base films and functional coated films. The production capacity of the plant is set around 1-1.2 billion square meters. The investment in the construction of the facility building and the acquisition of the equipment is estimated to reach around CNY 6.062 billion (USD 916 million). Yunnan Energy New Material will be financing the development of the plant with its own cash and fundraising efforts. Also, the plant will be developed over multiple phases.

With the new plant, Yunnan Energy New Material will be able to deliver sufficient quantities of separator films to its clients in North America in a timely manner. This investment will also allow the company to further accelerate the growth of its business in overseas markets and realize the aims of its global expansion strategy. In sum, Yunnan Energy New Material is building the new plant to strengthen its international presence.

According to the research by global market intelligence firm TrendForce, Yunnan New Energy Material has built or is building production bases at several locations across China (i.e., Shanghai, Wuxi, Zhuhai, Suzhou, and Jiangxi). The company’s production capacity in China currently totals around 5 billion square meters. Outside China, the company is now building a production base in Hungary. This overseas base is expected to enter operation in the first quarter of 2023.

An Order from Europe Worth CNY 4.558 Billion 

A day before the announcement of a new plant in the US, Yunnan New Energy Material disclosed that its subsidiary SHK has entered into a supply agreement with Automotive Cells Company SE (ACC). Under the agreement, SHK will provide about CNY 4.558 billion (EUR 655 million) worth of film materials to ACC between 2024 and 2030. 

Based in France, ACC manufactures battery cells and modules used in EVs. The ownership of this company is equally divided among Mercedes-Benz, Stellantis, and TotalEnergies. The company has also invested around EUR 7 billion into the development and production of EV batteries.

Yunnan Energy New Material said that the signing of the supply agreement with ACC indicates that it is making significant progress in selling film materials for EV batteries in the overseas markets. Yunnan Energy New Material expects that ACC’s demand will raise its profit and strengthen its competitive advantages.

It is worth pointing out that the boom in the EV market and tightening supply for raw materials have forced battery manufacturers to aggressively build up their inventories. Earlier this year, Yunnan Energy New Material has signed LTAs with major Chinese battery manufacturers including CATL and CALB. The LTA with CATL is worth around CNY 5.178 billion and guarantees an amount of around 3 billion square meters. The LTA with CALB is worth around CNY 2.5 billion and guarantees an amount of around 500 million square meters.

Looking back at Yunnan Energy New Material’s performance in 2021, the company posted CNY 7.982 billion in revenue, up 86.37% from 2020. The company’s net profit in 2021 came to RMB 2.718 billion, showing a massive increase of 143.6% from 2020. Turning to the first quarter of this year (2022), the company maintained its high growth, raising its revenue for the period by 79.62% year on year to CNY 2.592 billion. Its net profit for the same quarter also soared by 111.92% to CNY 916 million. 

At its latest earnings call that was held on April 12, Yunnan Energy New Material forecasts that global demand for battery separator films will reach 3.3-3.6 billion square meters in 2025. The company has also set the target of achieving an annual total shipment quantity of 1.8 billion square meters for 2025. Of that amount, wet separator films will account for 1.2-1.3 billion square meters, and 40% will go to clients in overseas markets.

This article is a translation of a Chinese article written by Wendy at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain.