Umicore announced it will construct a new precursor plant for Nickel Manganese Cobalt (NMC) Lithium Ion battery cathodes, which will be commissioned at the end of 2013 and gradually ramp up production during 2014. The new plant, which will double Umicore’s NMC precursor capacity, will be constructed close by the company’s existing Cheonan cathodes plant in South Korea, which has no available space any more for capacity extensions.
Umicore announced no precise capex figure, but we believe it concerns a sizeable investment of several tens of millions of €.
Our View:
Today’s press release, in combination with a recently announced 25% cathodes capacity increase at the South Korean plant, underpins the fast growth Umicore is witnessing in its rechargeable battery materials business. This growth is driven by continued growth of the portable electronics market (supported by the fast growth of tablet computers and smartphones) as well as the growth of the electrical vehicles market. All in all, we forecast the Li-ion based HEVmarket to grow from about 600,000 vehicles in 2012 to almost 9m by 2020, while we forecast about double digit annual growth for the other applications (mainly portable electronics and stationary power applications), yielding an expected fivefold in Umicore’s rechargeable battery materials revenue to an estimated € 1bn by 2020. For sure the rechargeable battery materials business is one of the fastest growing and most exciting parts of the company.
No change to our Accumulate rating and € 43 target price.