Recently, China Zhongji Investment completed a targeted investment in the listed company GEM (stock code: 002340). GEM is the first listed company in China's circular economy sector. The company was established in Shenzhen in 2001 and went public on the Growth Enterprise Market in January 2010. Its ultrafine cobalt powder and ternary precursor materials for power batteries account for 50% and 25% of the global market share, respectively. It is a world leader in several fields, including cobalt, nickel, and tungsten resources, and the recycling of waste batteries. 。
World-leading enterprise in the circular economy sector
GEM currently has two major business segments: Urban mines (waste recycling) and new energy battery materials. It has incubated five core industrial chains—recycling of cobalt, nickel, tungsten, and rare metals and the remanufacturing of cemented carbide CNC tools; recycling of e-waste and manufacturing of precious metals; recycling of waste batteries and manufacturing of power battery materials; recycling of scrapped vehicles and remanufacturing of auto parts; and hazardous solid waste and ecological governance. After more than a decade of operation, GEM has built sixteen major circular economy parks in eleven provinces and cities across China, and has invested in South Africa, South Korea, and Indonesia. Its circular economy spans 3,000 kilometers across China, radiating globally, making it the world's largest manufacturer of ternary precursors, the largest manufacturer of battery-grade cobalt oxide, the largest tungsten resource recycling plant, and the largest manufacturer of ultrafine cobalt and nickel powder. It is also China's largest wet nickel smelter, the largest lithium-ion power battery recycling base, the number one exporter in the waste recycling and new energy materials industry, and the number one in waste treatment and resource regeneration, etc.
Core technology and R&D strength are significantly advantageous.
GEM has always adhered to an innovation-driven strategy, investing heavily in R&D and establishing the GEM Central Research Institute as its core R&D institution. Currently, it has nearly 1,000 R&D personnel, accounting for about 20% of its total employees, including experts with special government allowances, postdoctoral fellows, doctors, and masters.
GEM possesses two national-level innovation platforms the National Engineering Research Center for E-waste Recycling and the National-Local Joint Engineering Research Center. Relying on these platforms, it has broken through foreign patent technology barriers and established China's core technology system for the recycling of waste batteries, e-waste, and rare earth resources. 。
GEM ( Jingmen ) Circular Economy Park
Currently, GEM has five core technologies that lead the world, including: green dismantling of e-waste and environmentally friendly processing of scrapped circuit boards; full life-cycle recycling of waste batteries and remanufacturing of power battery materials; recycling of rare earth, precious, and scattered metals; utilization of difficult-to-process low-grade cobalt and nickel raw materials; and overall resource utilization and remanufacturing of parts from scrapped vehicles.
The continuous upgrading of core technologies has laid the foundation for the continuous production of high-quality, high-specification products, and the company's ternary precursors and other products lead the global market in quality.
Securing raw material supply and high-quality customers
New energy materials are GEM's largest business segment, with ternary precursors growing the fastest. The stable supply of these materials depends on nickel and cobalt metal resources.
GEM's world's first cobalt industry museum
GEM has established cooperative recycling systems with China Minmetals, Foxconn, Volkswagen, Samsung, LGC, BAIC, and other companies. The recycled waste batteries account for 10% of China's total, and the amount of cobalt recycled annually is equivalent to China's original cobalt mining output. Through recycling and reuse, the problem of nickel and cobalt resources needed for precursors has been solved, and these resources are not subject to changes in the domestic and international environment, making the supply more stable.
In addition, the company has signed long-term contracts with international giants such as Glencore, MCC Ruimu, and Trafigura, guaranteeing the strategic supply of cobalt and nickel raw materials. In early 2019, GEM joined hands with industry giants such as QingShan Industrial and CATL to build a nickel resource base in Indonesia, locking in high-quality nickel resources and completely solving the problem of stable supply of nickel, the lifeblood metal for future ternary precursors.
By grasping the two key points of raw materials and the entire industrial chain, GEM has a significant cost advantage, greatly enhancing its product pricing power. Coupled with high-quality products, GEM has locked in the world's best customers, and has signed strategic orders for approximately 300,000 tons in the next three years. 。
Yang Xiaoying, Partner and Managing Director of China Zhongji Investment, said, "We are optimistic about the future development of the new energy industry and the bright prospects of resource recycling. Investment is an investment in the future, requiring forward-looking planning and the selection of industry leaders. From a business perspective, GEM, as an industry leader, has strong R&D capabilities and close strategic cooperation with upstream and downstream customers in the industry chain. Its various businesses are closely linked, showing a good development momentum. Despite the epidemic, the company's early planning ensured that its global industrial chain was not affected. Currently, GEM's stock price is in a relatively low area, and future performance has relatively good support. It is expected that this investment will bring safe and good returns."
