Feasibility Study & Project Initiation Report — Battery Production and Recycling Industrial Park

2023-07-01 07:59

I. Basic Project Overview

The project covers a land area of 100,000 square meters, with an annual capacity for dismantling 200,000 lead-acid batteries and manufacturing 4 million batteries. It includes the construction of production workshops and two battery production lines, as well as a supporting recycling industrial park for waste battery collection, dismantling and reprocessing.

II. Project Introduction

Chemical batteries are the predominant type of batteries. Based on reusability, chemical batteries are divided into primary batteries and secondary batteries. Primary batteries, also known as galvanic cells, can only be used once, such as zinc-manganese batteries and alkaline manganese batteries. Secondary batteries are rechargeable and cyclable, also called storage batteries. In storage batteries, chemical reactions of active substances generate electric power during discharge, while reverse chemical reactions take place to store electric energy during charging.

This project plans to establish a recycling system and a recycling & dismantling centre for waste batteries (mainly lead-acid batteries). Recoverable materials such as lead and plastics obtained from dismantling are processed and reused as raw materials in battery production lines to manufacture new batteries, which will then be sold locally.

III. Project Advantage Analysis

(1) Policy Advantages

The Ministry of Environmental Protection issued the Technical Policy for Pollution Prevention and Control in Lead-Acid Battery Manufacturing and Recycling, which sets out requirements for cleaner production, air pollution prevention, water pollution control, solid waste disposal and comprehensive utilization, as well as encouragement for R&D of new technologies in the lead-acid battery production and recycling industry. The industry should intensify industrial structure adjustment, optimize and upgrade products, rationally plan industrial layout, and further increase industrial concentration and scale.

(2) Project Advantages

Lead-acid batteries are the most inexpensive secondary batteries, with the price per unit of energy approximately one-third that of lithium-ion or nickel-metal hydride batteries. In addition, the main components of lead-acid batteries are lead and lead compounds, with lead accounting for over 60% of the total battery mass. Waste batteries retain a high residual value, and their recycling price exceeds 30% of that of new batteries, resulting in lower overall costs for lead-acid batteries. Currently, there are no comparable projects in the province, leaving ample market capacity and room for growth.

IV. Industry Background

(1) Current Status of the Lead-Acid Battery Industry

China is the world's largest producer, consumer and exporter of lead-acid batteries. The industry primarily operates on a production-to-order basis, with domestic consumption roughly equaling production volume minus export volume.

In recent years, China's lead-acid battery output has remained relatively stable, consistently exceeding 200 million kVAh. According to data released by the China Light Industry Information Center, China's lead-acid battery output reached 2,024.89 million kVAh in 2019, representing a year-on-year increase of 4%. In 2020, output reached 227.36 million kVAh, up 12.28% year-on-year.

From a structural perspective, domestic lead-acid battery production is concentrated primarily in Zhejiang, Hubei and Hebei provinces, which together account for approximately 55% of the national total. In addition, Jiangsu, Anhui and Guangdong each account for over 5% of national output, while all other regions account for less than 5% each.

Zhejiang Province is the largest producer, contributing 30% of national output, followed by Hubei Province at 13%, and Hebei Province at 12%.

Distribution of Lead-Acid Battery Output Across Major Provinces and Cities in China (Unit: %)

Battery manufacturing is both a traditional industry and an important component of the new energy sector in China. It is closely linked to multiple strategic emerging industries including new energy vehicles, renewable energy, modern electronic information, new materials and equipment manufacturing. As one of the most fundamental industries for national economic development, battery manufacturing underpins people’s livelihoods and the building of a moderately prosperous society. Battery products boast a wide range of applications and play a vital role in supporting national economic development under the new conditions, meeting national defense strategic requirements, and satisfying diversified consumption demands in people’s work and daily life.

(2) Project Prospect Forecast and Analysis

At present, the main commercially mass-produced secondary batteries include lead-acid batteries, nickel-cadmium batteries, lithium-ion batteries and so on. Nickel-cadmium batteries contain highly toxic cadmium and have been gradually replaced by other battery types. Lead-acid batteries and lithium-ion batteries are currently the most widely used on the market. Compared with other secondary batteries, lead-acid batteries have the following major performance advantages:

A. They have the longest history of industrial production with the most mature technology, featuring stable, reliable performance and good adaptability. B. Dilute sulfuric acid is used as the electrolyte, which is non-flammable. The batteries are designed under normal or low pressure and exhibit high safety. C. They deliver a high operating voltage and a wide operating temperature range, suitable for high-rate discharge applications such as hybrid electric vehicles (HEVs). D. They support float charging and show excellent performance under shallow charge-discharge cycling, making them applicable to uninterruptible power supplies (UPS), new energy energy storage, peak shaving and valley filling for power grids, etc. E. The technology for large-capacity batteries is mature. Batteries with capacities of several thousand ampere-hours can be fabricated, facilitating large-scale energy storage.

Lead-acid batteries are the lowest-cost secondary batteries, with the price per unit energy around one-third that of lithium-ion batteries. In addition, lead and lead compounds are the main constituents of lead-acid batteries, and lead accounts for more than 60% of the total battery mass. Waste batteries have high residual value, and their recycling price exceeds 30% of that of new batteries, leading to a lower overall cost for lead-acid batteries.

In 2019, the State Administration for Market Regulation and the Standardization Administration of China approved and issued the Technical Specification for Recycling of Waste Lead-Acid Batteries. The specification stipulates the treatment methods and management measures for the collection, storage, transportation and transfer of waste lead-acid batteries. It establishes a “one sold, one collected” recycling system to promote the integration and development of China’s waste lead-acid battery recycling industry.

The social stock of electric bicycles in China is nearly 300 million. The average service life of lead-acid batteries is 1.5 to 2.5 years, which indicates a huge market demand for battery replacement.

For the development of the lead-acid battery industry, the sales volume of lead-acid batteries for electric bicycles in China was forecast to grow at an average annual rate of 5.4% up to 2022, demonstrating that the lead-acid battery market still possesses development potential.

V. Project Investment Budget

The total investment is RMB 400.00 million, including RMB 350.00 million for construction investment and approximately RMB 50.00 million for working capital.

VI. Project Benefit Evaluation

Upon reaching full production capacity, the annual sales revenue will be RMB 210.00 million and the annual profit will be RMB 66.00 million. The payback period is 7 years (after tax, including a 1-year construction period), and the return on investment is 16%.