Yichun, the “lithium capital of Asia”, tore the scar of ESG.
On December 6, Yichun, Jiangxi Province, issued a notice that it was found that Jiangxi Yongxing Special Steel New Energy Technology Co., Ltd. was suspected of discharging pollutants in the way of evading supervision. At present, the public security department and the ecological department have filed a case to investigate the company. Jiangxi Yongxing Special Steel New Energy Technology Co., Ltd. is the main implementation platform of the listed company – Yongxing Materials Lithium New Energy Business.
Previously, on November 24, Yichun City’s ecological environment monitoring department found that thallium concentration was abnormal after monitoring and analyzing all indicators of drinking water sources in the main stream of Jinjiang River. After learning the situation, Yichun immediately carried out water supply guarantee, source tracing and other disposal work.
It is understood that thallium is more toxic to human body than lead and mercury, which is similar to arsenic. It can enter human body and accumulate through drinking water, food and respiration. Thallium compounds have mutagenicity, carcinogenicity and teratogenicity, which can lead to the occurrence of esophageal cancer, liver cancer, colorectal cancer and other diseases, and pose a great threat to human health.https://www.slw-ele.com/
On November 29, Yongxing Materials issued an announcement confirming the above news – the production line of lithium carbonate smelting of Jiangxi Yongxing Special Steel New Energy Technology Co., Ltd., a wholly-owned subsidiary, needs to be temporarily stopped. Yongxing Materials said that the shutdown was due to the abnormal water quality of Jinjiang water source found in the daily monitoring of Gao’an City, Jiangxi Province, and the ecological and environmental department was carrying out investigation work upstream and downstream. Yongxing New Energy temporarily suspended the production line of lithium carbonate smelting in order to cooperate with the environmental investigation.
In response to the suspension of production due to environmental protection issues mentioned by Yongxing Materials, Shenzhen Stock Exchange also sent a letter of concern to Yongxing Materials on November 30, requesting Yongxing Materials to explain the specific impact of the suspension on the company’s production and operation, and the expected resumption time.
On December 9, Yongxing Materials announced that the inspection and maintenance of the production facilities of the wholly-owned subsidiary Jiangxi Yongxing Special Steel New Energy Technology Co., Ltd. had been completed and production was resumed on December 9, 2022.
With the rise of the lithium battery industry, Yichun, a beautiful city, has become the lithium capital of Asia with an annual output value of 100 billion yuan. However, this serious environmental pollution problem has exposed the shortcomings of listed companies such as Yongxing Materials in ESG.
Yichun Scar
“There is a spring beside the city, which is as clear as a spring and pleasant to drink.”
Yichun, named for its spring in history, is not only full of poetic and picturesque charm, but also an immortal place. Important Zen masters such as Mazu Daoyi and Baizhang Huaihai are all here to promote Buddhism, and they are also the birthplace of the three major Zen sects: Weiyang, Linji, and Caodong.
Today, this beautiful city has indescribable “scars”. The water in Yichun has changed from “delicious” to “poisonous”.
In this Yichun pollution incident, in addition to Yongxing Materials, a company named Jiangxi Qijin Materials Co., Ltd. was suspected of evading regulatory emissions of pollutants. The source of abnormal thallium concentration in drinking water in the main stream of Jinjiang River this time also comes from this company.
According to Tianyan Inspection, Jiangxi Qijin Materials Co., Ltd. was established in 2018 and located in Yichun City, Jiangxi Province. The major shareholder is Zhejiang Baorunnuo Enterprise Management Co., Ltd. This enterprise project mainly uses waste lead acid batteries and lead acid battery enterprises to produce lead containing alloys using lead containing waste as raw materials.
In addition to reports from Yongxing Materials and Qijin Materials, some listed companies have announced the temporary suspension of production of Yichun lithium carbonate production line.
On December 2, Zhejiang Kanglongda Special Care Technology Co., Ltd. announced that its holding subsidiaries, Tiancheng Lithium and Xiecheng Lithium, planned to temporarily suspend production due to equipment maintenance, facility maintenance, and cooperation in upgrading and transformation. Infrastructure of Shanghai High tech Industrial Park.
On the evening of December 1, Anshan Heavy Mining Machinery Co., Ltd. disclosed that its holding subsidiary, Lingneng Lithium Industry, temporarily suspended production due to road construction in the park, carrying out equipment overhaul and facility maintenance. It is estimated that the equivalent production of lithium carbonate can be reduced by about 20 tons per day, with a revenue impact of about 11 million yuan/day.
The announcement of the suspension of production of Kanglongda and Anzhong also triggered market speculation, and was also suspected of being involved in the local lithium battery industry pollution storm in Yichun.
Unlike the suspension of road construction of Kanglongda and Anzhong, Yongxing Materials has attracted much attention due to its cooperation with environmental protection investigation.
It is understood that Yongxing Materials is a leading mica lithium extraction enterprise in China. There is a production base in Yifeng County, Yichun City. Relying on local lithium mica resources, develop and produce battery grade lithium carbonate and comprehensive utilization of tailings. According to the financial report, Yongxing Materials achieved a net profit of 4.271 billion yuan in the first three quarters of this year. Its lithium new energy business achieved 13800 tons of lithium carbonate sales and a net profit of 4.032 billion yuan. The net profit of lithium new energy business accounts for nearly 95% of the net profit of listed companies.
The giants compete for the “lithium capital of Asia”
Ten years ago, Yichun was known as the “lithium capital of Asia” due to the rise of lithium mines.
The output of lithium carbonate in Yichun will be 81000 tons in 2021, more than a quarter of the national output. It is estimated that by 2025, the output of lithium mica concentrate and lithium carbonate in Yichun will reach 7 million tons and more than 500000 tons respectively.
In general, Yichun has formed the development model of the whole industrial chain of “lithium ore – lithium salt – lithium material – lithium battery – lithium application – lithium recovery”. However, the lithium battery industry chain enterprises in the local layout are still concentrated in the upstream mining link and the midstream power battery production link, and the environmental bearing pressure is high.
As the price of lithium carbonate continues to rise, more and more power battery enterprises begin to distribute lithium resources in the upstream. Yichun, the “lithium capital of Asia”, has increasingly become a hot destination. In the past two years, new energy leaders such as Ningde Times, BYD, Ganfeng Lithium, Guoxuan Hi-Tech and Xinwangda have settled in Yichun with large projects of more than 10 billion yuan.
In April this year, Yichun Times, a subsidiary of Ningde Times Holdings, successfully won the exploration right of ceramic clay (containing lithium) in Jianxiawo mining area, Zhenkouli, Yifeng County, Yichun City, Jiangxi Province, at a price of 865 million yuan.
In September, BYD established a new mining company in Yichun, with a registered capital of 2 billion yuan, to construct 30GWh power batteries and 100000 tons of battery grade lithium carbonate and ceramic clay (containing lithium) ore mining and beneficiation.
Guoxuan Hi-Tech is one of the earliest power supply manufacturers to enter the front-end of Yichun layout. Its investment in Jiangxi includes a 30GWh power battery project, a 20 million ton mining and mineral processing project, and a 120000 ton lithium carbonate project. Currently, the 10GWh project of Guoxuan Battery Factory has been put into production, and the second phase of the 20GWh power battery project has commenced construction.
According to rough statistics, in the first half of this year, Yichun has signed up to 29 new lithium energy projects, and 21 are under negotiation, with a planned investment of 142.5 billion yuan. The total investment of Guoxuan Hi-Tech, Ningde Times and BYD alone reached more than 60 billion yuan.
A person in charge of Yichun Municipal Bureau of Industry and Information Technology said that Yichun has good lithium resources and adheres to the development concept of “good resources for good industry”, which has attracted a large number of enterprises to settle in Yichun. As of August this year, there are 159 lithium enterprises in Yichun, and it is expected that the lithium industry will realize revenue of more than 100 billion yuan in 2022.
However, with the rapid development of the lithium battery industry in Yichun, serious environmental problems have also followed. In places such as Yifeng, Shanggao, and Gao’an, where the Jinjiang River flows, lithium battery enterprises and building ceramic enterprises are densely distributed, and the issue of lithium battery waste and pollution has always been a concern.
In August of this year, the Second Ecological and Environmental Protection Supervision Group of Jiangxi Province reported to Yichun City that there are some prominent ecological and environmental issues that need to be addressed in Yichun City, including problems such as poor rainwater and sewage diversion and non-standard storage in some lithium power enterprises. The treatment of mineral processing tailings and smelting lithium slag poses significant ecological and environmental risks and hidden dangers. The inspector requested Yichun City to strengthen the supervision of industrial enterprises according to law, and do a good job of ecological environmental protection for the lithium new energy industry from a high starting point and high standard.
ESG cannot talk on paper
The “lithium capital of Asia” pollution incident has also sounded an alarm bell for ESG, a listed company.
ESG, also known as environmental, social, and corporate governance, assesses the sustainability of enterprise operations and their impact on social value from three dimensions: environmental, social, and corporate governance. E refers to the environment, which is the most important and core content in the ESG evaluation system.
Therefore, Yongxing Materials, which has been investigated for this pollution incident, is not completely inactive in ESG, and its annual report also issued a 2021 social responsibility report.
This report discloses the discharge of main pollutants of Yongxing Materials, which can be regarded as the disclosure of ESG-related information. In terms of environmental impact monitoring and management, the report mentions that the company has set up emergency plans for environmental emergencies, as well as environmental self-monitoring plans, etc., but it has less space and does not put forward clear objectives and solutions.
In the whole report, the environmental content is only 3 pages, which is very small, reflecting the weak environmental awareness of Yongxing Materials. However, being investigated by the police shows that the ESG of Yongxing Materials is only a paper and has not been put into real ESG capacity building.
As an important industry on the “dual carbon” energy storage track, lithium batteries have important value for the promotion of clean energy, and should have advantages in ESG. However, due to weak awareness of environmental protection, ESG is just talking on paper, but it poses significant risks due to pollution.
This incident may also serve as a warning for the lithium battery industry to attach importance to risk management and ESG information.
It is worth mentioning that during the outbreak of environmental problems in Yichun, the former secretary of Yichun City, who was sentenced to 11 years in prison, was exposed. In order to