Tianneng Power International Ltd, which manufactures motive battery products widely used in electric vehicles on the mainland, is expected to achieve competitive advantages backed by its lead-recycling approach from used lead-acid batteries.

The Hong Kong-listed company has invested over 500 million yuan in the first-phase of its new lead-recycling plant at Changxing city of Zhejiang Province, which, is to able to produce 2 million kilovolt-ampere-hours (KVAh) sealed lead-acid storage batteries with used batteries.

After the completion of its second-phase at its recycling plant in the same area built at an estimated 500 to 600 million yuan, the plant, which is designated to handle 150,000 tons of used batteries, will produce 100,000 tons of recycled lead per year, according to Tianneng's Chairman Zhang Tianren.

Motive lead acid battery is one that employs lead acid chmeistry for deep cycle application.

The Chinese government has vowed to tighten controls over production of recycled lead by requiring large and medium-sized primary smelters to collect and process used lead-acid batteries as feed for their production. Local authorities at the same time have shut down thousands of lead-acid battery producers, processors as well as recyclers in a bid to prevent pollution from such operations.

A new regulation took effect in July requiring existing plants to have an annual production capacity that is higher than 200,000 KVAh by Dec 31, 2013, while new lead-acid battery production projects output have been set to surpass 500,000 KVAh at each single plant.

Although the whole sector has encountered operational difficulties due to the tightened rules, Zhang, nevertheless, sees it as an opportunity for leading lead-acid battery producers including Tianneng to stand out among its peers during the process of industry optimization and integration.

"During the consolidation, the number of companies in the market will become lesser while the demand remains buoyant. By using the lead recycled from old batteries, the cost of producing new batteries has also been effectively lowered by 10 percent compared with (production) using newly purchased lead from the market," Zhang told a group of reporters in Changxing city on Tuesday.

China is the world's biggest producer and consumer of refined lead. But statistics of the International Lead and Zinc Study Group showed that the lead reserves in China only accounted for 16 percent of the global reserves, only sufficient for exploitation for the next two decades.

Tianneng currently reclaims old batteries of its own brands through its hundreds of stores throughout the territory. After the completion of its two-phase plants in Changxing and another recycling plant in Henan Province, the company also aims to extend its recovery range to include old lead-acid batteries of other brands to lift the recycling amount of lead to feed its own production, according to Zhang.

The recycling plant will provide Tianneng "a competitive advantage over its peers" as there are high technological barriers for the construction of lead recycling plants and the government is actively shutting down substandard lead recycling plants, according to a report by Quam Securities dated Sept 25.

litao@chinadailyhk.com

(HK Edition 10/13/2012 page2)