Interview with He Liren, Chairman of Longbai Group: Global demand for titanium dioxide is generally stable, and the revenue target for the "14th Five-Year Plan" is 50 billion yuan

"the market is still challenging in 2024, and the overall global demand for titanium dioxide is stable, but the global supply continues to grow, and the new capacity will be gradually put on the market in 2024."

Recently, the chairman of SZ002601 Group (stock price 16.62 yuan, market capitalization 39.66 billion yuan) and Benliu made the above outlook for the market in 2024 during an exclusive interview with the Daily Economic News.

On April 17, 2023, Longbai Group held the first meeting of the eighth board of directors, and Benliu was elected chairman. He served as deputy general manager of Longbai Group since 2005, and later served as general manager, personnel administrative director, executive vice president, president, director and so on.

The overall market of titanium dioxide is in a state of relative equilibrium.

Longbai Group is mainly engaged in the production and sales of titanium dioxide, titanium sponge, zirconium products, lithium cathode materials and other products. The company's titanium industrial base layout of Henan, Sichuan, Hubei, Yunnan, Gansu and other five provinces and six cities, initially formed from titanium mineral mining and processing, to titanium dioxide and titanium metal manufacturing, the comprehensive utilization of derivative resources of the green industry chain.

Data show that by the end of the third quarter of this year, Longbai Group had revenue of 20.262 billion yuan, an increase of 12.38 percent over the same period last year; tax payment of 1.648 billion yuan, an increase of 8.85 percent over the same period last year; and net profit of 2.142 billion yuan.

And Benliu reviewed the company's business focus in 2023: at the beginning of 2023, the group set a production and marketing target of double titanium dioxide exceeding 1.2 million tons, and issued relevant documents to support all aspects of production and sales work. In April, the group held a new board of directors election, forming a scientific and reasonable modern enterprise management replacement mechanism. At the same time, further optimize the company's organizational structure, improve management efficiency, and ultimately improve the company's profitability. In May, Yunnan Guoti, a subsidiary of the Group, completed 2.272 billion yuan A round financing, of which Shengchuang invested 900 million yuan, and China Building Materials New Materials Fund invested 400 million yuan.

The production capacity of titanium dioxide, sponge titanium, lithium iron phosphate, iron phosphate and graphite negative electrode are 1.51 million tons / year, 50,000 tons / year, 100000 tons / year, 25000 tons / year and 50,000 tons / year respectively. Graphitization capacity 50, 000 tons / year.

Longbai Group also said in the semi-annual report of 2023 that the market of titanium ore and titanium dioxide in China showed a "rising and falling" trend in the first half of 2023, and the price of imported ilmenite showed a downward trend, affected by the continued depreciation of RMB prices and the rise in exchange rate. the price of imported ilmenite equivalent to RMB did not decline significantly; due to the decline in terminal demand, market prices declined slightly, but imported ilmenite prices remained relatively high due to the shortage of supply.

Talking about the recent titanium dioxide market, and Benliu told the Daily Business News: "the overall problem of the titanium dioxide industry is that the supply of titanium ore has been slightly reduced recently, at the same time, with the implementation of the winter environmental protection policy, due to the impact of power and gas restrictions in some areas, more enterprises will go into production suspension and maintenance. Although the demand for titanium dioxide in winter is weak, the reduction of the supply side makes the market as a whole in a state of relative balance. "

New energy battery materials is a long-term and arduous mission

For the sponge titanium, which is also a series of titanium products, Longbai Group has chosen to spin off and list the relevant companies in order to further enhance its market competitiveness.

On November 21, Longbai Group announced that it plans to spin off its holding subsidiary Yunnan Guoti Metal Co., Ltd. (hereinafter referred to as Guoti shares) to the main board of the Shenzhen Stock Exchange for listing, and the number of shares to be issued accounts for no less than 10% of the total share capital after the issuance of Guoti shares. After the completion of the spin-off, Longbai Group will not change its ownership structure and will maintain its controlling stake in Guotian shares.

Longbai Group said in the announcement that Guoti shares can expand financial strength and broaden financing channels through independent listing, while continuing to consolidate and develop sponge titanium business and further enhance market competitiveness at the same time, choose the right time to extend the industrial layout to the directly related downstream.

He Benliu also told reporters: "the spin-off will not have a substantial impact on the continuous operation of the company's titanium dioxide plate and other businesses, and through the spin-off, the investment and financing capacity of Guotian shares will be significantly improved. It is conducive to the further development of Guotian shares and the promotion of market competitiveness, which in turn helps to enhance the company's overall profitability in the future."

In addition, Longbai Group is also in iron phosphate and other new energy battery cathode materials and other areas of layout, and Benliu said: "New energy battery materials is a long-term and arduous mission."

In the strategy of Longbai Group, he Benliu said: "as the fulcrum of strategic transformation of 'changing lanes and taking the lead', the new energy industry shoulders the great mission of the group company to create the second growth curve, which is of great significance to the company's high-quality and sustainable development."

Based on the coupling technology of titanium and lithium industry, Longbai Group efficiently put into production the iron phosphate built in Jiaozuo, Henan Province during the 14th five-year Plan period, with an annual production capacity of 100000 tons, ranking among the top five in China's industry.

"the project takes full advantage of the group's iron source, phosphorus source, hydrogen and other resources to build iron phosphate supporting projects such as phosphoric acid and hydrogen peroxide, and extend the upstream raw material end chain. the waste resources such as ferrous sulfate, waste acid, caustic soda and hydrogen produced in the production process of titanium dioxide are used as raw materials to prepare lithium cathode material iron phosphate to produce lithium cathode material lithium iron phosphate and improve the downstream product end chain. Finally, a complete industrial chain is formed from the end of the raw material to the precursor and then to the cathode material. "

According to Longbai Group's 2023 semi-annual report, the current revenue from iron products is 1.281 billion yuan, and revenue from new energy materials is 556 million yuan, and Benliu said that revenue from new energy materials will gradually increase: "with the gradual release of production capacity of new energy projects such as iron phosphate, the production line is becoming more and more stable and the quality is steadily improving. the company will supply lithium battery materials and other high-quality products to the market continuously, steadily and in large quantities. At the same time, with the gradual recovery of the external market of new energy and the expansion of customer demand, the sales of various products in the field of new energy will continue to rise, and the proportion of operating income in the group's total revenue will also increase. "

The revenue target of the 14th five-year Plan is 50 billion yuan.

Extended from the topic of titanium-lithium industry coupling technology, and Benliu also specially mentioned related topics in the field of ESG.

According to him, Longbai Group has created three industrial chains of titanium, zirconium and new energy to explore the potential of industrial coupling, in which the group independently developed the technology of "sulfur-chlorine coupling" and the preparation of polyferric sulfate from ferrous sulfate solution. from the source to reduce the production of acidic wastewater, reduce the output of solid waste titanium gypsum, "solid waste year can reduce emissions by about 70%."

According to he Benliu, in promoting the construction of green mines and yards, Longbai Group has invested millions of yuan to implement the project of "Ecological Promotion and Beautiful Countryside". It has successively standardized the construction of Liuzhuang, the queen of the temple, the titanium gypsum yard of the fishing yard, and the reclamation pilot project of Qixiang Village in Guangji Town, realizing that the abandoned soil yard has been turned into a park and gypsum yard into green farmland, and the total amount of green land has been restored to nearly 1000 mu.

For the overall market next year, and Benliu said: "at present, from the feedback of downstream customers, the market is still facing greater challenges in 2024, and the overall global demand for titanium dioxide is stable, but the global supply continues to grow. The new capacity will be put on the market gradually in 2024. The recovery of the European economy will be a long-term process, and there is some uncertainty about the expansion of the European market in the future. The United States still maintains high tariffs on Chinese titanium dioxide. "

"generally speaking, under the relatively difficult circumstances of the market in 2024, we will respond to the situation, innovate marketing measures, stimulate market vitality, and constantly enhance the ability of enterprises to resist risks."

He Benliu said that during the 14th five-year Plan period, the group will anchor a revenue target of 50 billion yuan. On the basis of achieving a titanium dioxide production capacity of 1.51 million tons per year, the group plans to further increase the production capacity of titanium dioxide and sponge titanium, as well as vanadium and rare precious metals, as well as intelligent manufacturing, circular economy and other areas to make breakthroughs.