The domestic waste battery recycling industry is struggling with accumulated losses. As concerns about demand shrinkage persist due to the sluggish performance of upstream industries such as electric vehicles and batteries, the value of recycled materials is also declining due to falling mineral prices.
According to the Financial Supervisory Service electronic disclosure system (DART) on the 19th, SungEel HiTech's operating loss for the first quarter was approximately 15.5 billion won, an increase of about 15% compared to the same period last year (13.5 billion won). The net loss was 17.1 billion won, a 58.3% increase from the same period last year. SungEel HiTech, which transitioned to a deficit in 2023, also incurred a loss of about 73 billion won last year.
Despite ongoing losses, production capacity has steadily increased while the profitability of overseas factories has worsened. In the first quarter, all of the companies in Malaysia, India, Hungary, Poland, Indonesia, and the U.S. state of Indiana reported losses. Last year's overseas sales of battery materials amounted to 27.6 billion won, a decrease of about 27% compared to the previous year (37.7 billion won).
The debt ratio increased from 202.25% at the end of last year to 239.52% in the first quarter of this year. The debt ratio was 77.42% at the end of 2023 and has steadily risen to 101.83% in the first quarter of 2024, 133.54% in the second quarter, and 149.24% in the third quarter. This is a result of the expansion of the 3rd plant in Gunsan, Jeollabuk-do, and the acceleration of establishing and operating new overseas plants.
In the past two years, the decrease in demand for electric vehicle batteries has also challenged the global waste battery recycling industry, including SungEel HiTech. The trend is increasing among corporations that stop operating recycling plants altogether or postpone investments. As of the first quarter, the operating rate of major recycling plants worldwide is estimated to be about 40%.
Sebitchem, which shares the domestic waste battery recycling market with SungEel HiTech, has seen its financial structure shaken and ultimately sold its management rights. The largest shareholder, CEO Park Min-kyu, sold about 30% of the company's equity to private equity fund operator LX Investment in February.
Sebitchem entered the KOSDAQ market about a month after SungEel HiTech was listed in July 2022. In the following year, 2023, the company turned to deficits with a loss of 4.9 billion won, and it recorded a loss of about 6.2 billion won last year. In the first quarter of this year, it continued to incur losses (-2.1 billion won).
The decline in the prices of key minerals that make up cathode materials, including lithium, is also a factor limiting the profitability of the waste battery recycling industry. When mineral prices fall, the value of materials produced through recycling also decreases. The price of battery materials produced by SungEel HiTech fell from 25,476 won per kilogram in 2023 to 18,227 won last year, and it further decreased to 16,835 won in the first quarter of this year.