March 8, 2018 / 11:08 AM / 10 months ago

UPDATE 2-Chinese battery maker Tianneng considering foreign plant

* Tianneng targeting battery markets in South and Southeast Asia

* To decide this year on country for factory - chairman

* Plans to boost capacity by 20 pct, sales by 20-30 pct in 2018 (Adds detail)

By Tom Daly

BEIJING, March 8 (Reuters) - Chinese battery maker Tianneng Group is considering setting up a factory in South or Southeast Asia to tap local demand, while expanding capacity in China by 20 percent this year because of the electric vehicle boom, its chairman said on Thursday.

Zhang Tianren told Reuters that Tianneng, which mostly makes lead-acid batteries used in electric scooters and cars, was considering Vietnam, Thailand, Malaysia, Pakistan and Bangladesh as destinations for a plant with an annual processing capacity of at least 100,000 tonnes.

“These (countries) are all relatively good,” Zhang, a delegate from China’s eastern Zhejiang province at the National People’s Congress in Beijing, said in an interview. “We might want to go and have a look at several countries. If they have good conditions, open a factory.”

A decision on which country to build in will be made this year, he said.

A lot of small and middle-sized Chinese battery companies have already gone over to South or Southeast Asia because of the 4 percent consumption tax on lead-acid batteries in China, according to Zhang. “It’s very hard for a lot of companies to bear. The pressure is very big,” he said.

The migration mirrors one in China’s scrap copper sector, where new restrictions on imports of solid waste and a need for importers to prove they are end-users of the material have prompted scrap firms to set up shop in South or Southeast Asia instead.

But for Tianneng, which both uses refined lead and recycles spent batteries to make its products in China, the move is also about “going overseas” and “integrating international resources” in line with Beijing’s Belt and Road Initiative, Zhang said.

“We have to evaluate the place, how many waste batteries there are and develop capacity based on the amount of raw materials in the market.”

Unlike the scrap copper firms, which aim to process material in Southeast Asia into a form that will be accepted in China, Tianneng plans to purchase and process raw material locally, then manufacture and sell its products on the local market.

Still, Zhang, who also chairs listed unit Tianneng Power , remains bullish on battery demand in China, where the company plans to raise its recycling capacity by around 20 percent this year to 600,000-700,000 tonnes.

“Our target is 1 million,” he added, without giving a time frame for that level to be reached.

Zhang said he expects Tianneng, which also makes lithium-ion batteries, to maintain annual sales growth of 20-30 percent, without disclosing the 2017 sales figure. (Reporting by Tom Daly; Editing by Tom Hogue and David Evans)

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