On December 28, 2022, Dawei Technology announced that it had signed an investment cooperation agreement with the government of Guiyang County. Under the agreement, Dawei will set up projects related to the comprehensive utilization of lithium resources, the Li-ion battery industry chain, and the manufacturing of new energy utility vehicles. The total investment in these project is estimated to reach RMB 22 billion. Guiyang County is under the administration of Chenzhou, a prefecture-level city in China’s Hunan Province.

The distribution of the RMB 22 billion investment is as follow: RMB 9 billion will be spent on the mining and sorting of lithium ores, the manufacturing of lithium carbonate, and related environment protection solutions such as slag processing. RMB 12 billion will be spent on the manufacturing of cathode materials and Li-ion batteries. Lastly, RMB 1 billion will be spent on the manufacturing of new energy utility vehicles.

There are two main projects. Below is a detailed description:

Project #1 will comprise ore mining, ore sorting, lithium carbonate production, and slag processing. Dawei will develop the manufacturing of battery-grade lithium carbonate in two phases, each comprising 20,000 tons per year of production capacity. The total production capacity for ore mining and sorting will reach 8 million tons per year. The facilities for slag processing and other environment clean-up tasks will be built simultaneously with the setup of the ore mining and sorting sites.

Project #2 will comprise cathode materials and batteries. It will be developed in two phases, each comprising 10GWh per year of production capacity.

Under the agreement, Dawei will be mainly in charge of funding and construction for the lithium resource project and the new energy utility vehicle project. However, other entities will join Dawei as investment partners as well.

The core businesses of Dawei Technology are actually accessories related to smartphones, memory solutions, and miscellaneous electronic products. For 2021, Dawei’s revenue and net profit came to RMB 857 million and RMB 15.48 million respectively. For the first three quarters of 2022, Dawei’s revenue and net profit came to RMB 640 million and RMB 12.86 million respectively.

Sales of new energy vehicles have kept climbing worldwide in recent years. With new energy vehicles becoming a rapidly growing industry, demand has also been surging for Li-ion automotive power batteries. Furthermore, the deployment of utility-scale energy storage systems has also widened significantly, and this trend also contributes to the growth of the demand for Li-ion batteries. On account of these developments, governments and enterprises now regard lithium as a critical strategic resource.

Moreover, the market for commercial new energy vehicles has scaled up quickly thanks to the needs related to urban transportation. Dawei therefore intends to bring innovations and positive changes to the wider automotive market. Taking advantage of the bright prospect of the new energy vehicle industry, Dawei wants to capture opportunities involving utility vehicles, vehicle parts, etc. The company expects itself to create a lot of potentials.

In May 2021, Dawei Technology and several other investors formed a joint venture named Dawei Hongde. Dawei has a stake of 10% in the Shenzhen-based joint venture. This development signaled Dawei’s intention to pivot into the field of new energy utility vehicles. Dawei Hongde specializes in the manufacturing of parts for new energy vehicles as well as the modification of new energy vehicles.

Later, in November 2022, Dawei Hongde and the administration of the Jianggang Mountains Economic and Technological Development Zone entered into an investment agreement. Under the agreement, Dawei Hongde will set up a plant for the manufacturing of new energy utility vehicles. The development zone is under the administration of Ji’an, a prefecture-level city in China’s Jiangxi Province.

The latest investment cooperation agreement with Guiyang County is a major step forward for Dawei in its efforts to extend its presence into the upstream of the industry chain. By securing lithium resources, Dawei will be stronger competitively as it attempts to branch into the field of new energy technologies and become a manufacturer for new energy vehicles.

Dawei said it will make full use of the rich lithium resources in Guiyang County and formulate an effective strategy for establishing a significant presence in the market for new energy solutions. The agreement will also enhance Dawei’s core competitiveness and profit generation in the wider automotive market. All in all, Dawei as a listed company and the government of Guiyang County will mutually benefit from the two projects as they complement each other strengths and move towards a common development goal.