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Yangtze Business Daily News●Changjiang Business Daily reporter Pan Ruidong

"Garbage Emperor" Xu Kaihua is further expanding his recycling empire.

Before founding GEM (002340.SZ), Xu Kaihua was a professor at Central South University. An experience during a visit to Japan made him determined to enter the waste battery recycling industry.

Xu Kaihua is familiar with both R&D and the market. He started from recycling used power batteries and switched to the power battery raw materials track. With the development of the domestic new energy industry, GEM has grown rapidly and has now become an industry leader with an annual revenue of 30 billion yuan.

GEM also faces challenges. The slowdown in the growth of new energy and domestic overcapacity are tough battles in the industry.

Xu Kaihua's response measures are to export production capacity and markets overseas and improve the upstream and downstream industrial chains. The latest news is that GEM has deepened its cooperation with South Korea's ECOPRO, adding 265,000 tons of precursor orders to jointly build a full industrial chain of "nickel resources-precursors-cathode materials" to cope with the global industry's internal competition.

Professor goes to sea to dig for gold in "urban mines"

Born in Jingzhou, Hubei, and studied in Changsha, Hunan, Xu Kaihua's alma mater, Central South University, is known as the "Huangpu Military Academy" of China's new energy industry. BYD's Wang Chuanfu, Sany Group's Liang Wengen, Rongbai Technology's Bai Houshan, Penghui Energy's Xia Xinde, etc., all graduated from Central South University. Unlike others, Xu Kaihua chose a track that few people value, recycling "garbage".

Before starting his own business, Xu Kaihua was a professor at the School of Metallurgical Science and Engineering of Central South University. An experience of visiting Japan made him decide to embark on the road of entrepreneurship.

During the visit, Xu Kaihua met Ryoichi Yamamoto, one of the advocates of Japan's "environmental nation", and was deeply touched. Xu Kaihua also came into contact with the world's most advanced resource recycling technology in the metallurgical industry. He decided to apply this concept in China. After returning to China, Xu Kaihua saw a different picture of waste electronic products in the city. The electronic waste in the city has become a "city mine", and he decided to make a difference in this mountain.

In 2001, Xu Kaihua resolutely resigned from his job to start his own business, establishing a green environmental material research and incubation center and named it "GEM". These three letters are the abbreviation of "GreenEco-Maunfacture".

When the company was first established, Xu Kaihua believed that cobalt and nickel were widely present in electronic products, automobiles and other products, so he focused on the recycling of used batteries and cobalt-nickel waste.

In a field that no one in China had yet ventured into, Xu Kaihua could only cross the river by feeling the stones. "We were very poor in the early days of our business." Xu Kaihua once recalled that at that time, the laboratory's electricity bill consumed hundreds of thousands of yuan a year, and it could only be delayed in paying. It was common for employees' salaries to be paid only once every three to five months.

In 2004, Xu Kaihua's team finally broke through the key technology of recycling ultra-fine cobalt-nickel powder, successfully replacing products based on raw ore. In order to let customers feel at ease using GEM's products, he let customers use them for free, using this method to build trust between himself and customers.

As it gained more and more customers, GEM's performance also grew rapidly. From 2006 to 2008, GEM's revenue increased year by year, reaching 104 million yuan, 219 million yuan, and 304 million yuan respectively. In 2010, GEM entered the capital market, and its revenue reached 919 million yuan the following year.

At present, GEM has a high reputation in the field of waste recycling. The company has established 16 green recycling and waste circulation treatment bases mainly for electronic waste, scrapped cars and retired power batteries in 11 provinces and cities including Hubei, Hunan, Guangdong and Jiangxi, spanning 3,000 kilometers from north to south in China and covering more than 40% of China's land area.

Xu Kaihua also became the pioneer of China's "urban mine" and was called the "Garbage Emperor" by the media.

Mergers and acquisitions to expand the "recycling empire"

Technology is the foundation of GEM, and mergers and acquisitions are the wings of the company's development.

In December 2012, GEM acquired the equity of Kailike to improve its cobalt product line, open up the recycling industry chain from waste batteries and scrapped battery materials to new energy battery materials, and officially enter the power battery precursor business. Since then, Xu Kaihua has made frequent acquisitions and mergers, and during this period, he also acquired some equity in some domestic waste electronic product recycling companies.

Xu Kaihua has been expanding his recycling empire through mergers and acquisitions. At the same time, he has also begun to cooperate with international new energy giants to extend the recycling industry chain.

In 2016, GEM joined hands with internationally renowned companies such as Samsung and ATL to build a new energy full life cycle value chain of "battery recycling - material recycling - battery pack recycling - vehicle re-equipment", and gradually formed a "urban mine + new energy materials" dual-track driven business model.

Also in 2016, Xu Kaihua accelerated the pace of overseas mergers and acquisitions, acquiring a 30% stake in BAMETA GmbH held by German waste giant Remondis Group.

GEM's overseas revenue continues to grow. Data shows that in 2016, the company's overseas revenue was 384 million yuan, which soared to 2.481 billion yuan in 2017, and the revenue share also increased from 4.9% to 23.07%. In 2023, this share rose to 29.66%.

In addition to mergers and acquisitions, Xu Kaihua also promoted the export of production capacity. In November 2022, GEM signed a Memorandum of Understanding with South Korean companies ECOPRO and SKON. The three parties built a HPAL plant in Morowali, Sulawesi, Indonesia to produce MHP, with an annual output of 30,000 tons of nickel.

On the evening of August 16 this year, this cooperation ushered in new developments. According to the announcement, ECOPROBM, a subsidiary of South Korea's ECOPRO, will purchase an additional 265,000 tons of precursors from GEM to meet the increased demand in the US and European markets.

In terms of performance, after the decline in performance in 2023, GEM rebounded strongly in 2024. According to the performance forecast, in the first half of 2024, the company's net profit attributable to the parent is expected to be 661 million yuan to 765 million yuan, a year-on-year increase of 60%-85%.

In the first half of this year, the company's Indonesian nickel resource project produced and sold nearly 21,000 tons of nickel MHP in the first phase, achieving a 30% overproduction and a year-on-year growth of more than 100%, with significant cost reduction targets. At the same time, the company's core product ternary precursor production capacity was released, continued to increase in volume, market demand increased, and shipments exceeded 100,000 tons.

However, at present, GEM's market value has not yet recovered to its high point. At the end of August 2021, GEM's market value peaked at over 41 billion yuan. As of the close of August 16, 2024, the company's market value was 29.61 billion yuan, a decrease of more than 10 billion yuan.

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