Demand is surging for the core precursor materials used in the manufacturing of ternary cathode materials. As a result, many Chinese suppliers for cathode materials have been very aggressive in locking in procurement quantities with their suppliers for precursor materials in advance.
On July 20, XTC and GEM jointly announced that they have entered into an agreement for the provisioning of a new generation of ternary precursor materials. In the next five years, GEM will supply XTC with a total of 455,000-540,000 tons of precursor materials.
Also, under the agreement, both parties will be jointly developing precursor materials for high-voltage ternary batteries, quaternary batteries, batteries with high nickel and low cobalt, and cobalt-free batteries. GEM will design and manufacture products in accordance with XTC’s schedule and needs (with respect to core technologies, applications, specifications, performances, etc.). All intellectual properties resulting from the partnership will be shared between XTC and GEM.
The agreement also contains terms of exclusivity. Without XTC’s permission, GEM is forbidden to provide a third party with the R&D results and products resulting from the partnership. Also, without XTC’s permission, GEM is forbidden to directly or indirectly enter into a similar agreement with a third party for the next three years. In exchange, XFC guarantees that it will be the first buyer for any products resulting from the partnership.
GEM is a major global supplier for precursor materials and cobalt (II,III) oxide. The company has also been involved in other new energy market segments such as as recycling of EV power batteries. Based in China, XTC is a major global supplier for cathode materials used in Li-ion batteries (e.g., lithium cobalt oxide, ternary cathode materials, and precursor materials). Its well-known domestic and foreign clients include Panasonic, Samsung SDI, ATL, and BYD. Currently, XTC controls a substantial global market share.
GEM said this agreement will expand both parties’ business relationship and thereby reinforce both parties’ critical positions in the global supply chain for new energy technologies. XTC’s order will contribute to GEM’s progress in achieving the target of selling 500,000 tons of precursor materials by 2026. GEM’s influence in the global market for new energy technologies is also expected to grow significantly with this partnership.
GEM noted that this agreement will not affect its independence with respect to the operation and management of its various business units, nor will it noticeably affect its financial results for this year. The contributions from this agreement to the company’s development and growth will begin to occur in the near future as long as both parties carry out the terms in a timely manner.
XTC said this agreement is an important step forward in its efforts to establish collaborative relationships with other companies in the supply chain. By placing a huge order with GEM, XFC has ensured the stability of its supply for ternary precursor materials.
It is worth mentioning that XTC sealed a strategic alliance agreement with Zhejiang Power New Energy in December 2021. Under that agreement, Zhejiang Power New Energy will supply XTC with 40,000-50,000 tons of ternary precursor materials from 2022 to 2024. Also, at an even earlier date, XTC and CNGR Advanced Material inked a deal where the former will procure around 15,000-35,000 tons of ternary precursor materials from the latter every year.
This article is a translation of a Chinese article written by Martin at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.
