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Philippe Lavagna and Justin Nell retain a 40% share in Shu, while GEM will hold the remaining 60% after purchasing private investor Robert Martin’s stake.
Hong Kong-based Shu Powders was founded in 2004 and operates in Durban, South Africa, with capacity to produce up to 1,400 tpy of cobalt powder, according to its company website.
Shu, which Oehlers notes has already grown its volumes by 20% over the past year, has ambitious expansion plans following the purchase, and these are likely to take shape quickly. “Investment is going to be substantial,” Oehlers said. “Shu will be able to grow rapidly with the financial support of GEM.”
“We’ll build a cobalt and nickel refinery near Durban,” he explained.
The company is in the middle of an environmental impact assessment, which needs to be completed before construction can take place. Oehlers expects this assessment to be completed in 2017.
Shu currently produces cobalt powders for the hard metals and diamond tools sectors. Contrary to some peoples’ beliefs, none of the cobalt used in Shu’s powders originates from the Democratic Republic of Congo, explained Oehlers. This has been the case for a few years now, he added.
Following the construction of the refinery, Shu will also be able to process raw materials into cobalt and nickel salts like cobalt carbonate.
Shu’s main targets are niche markets, Oehlers explained, but the company could one day sell for use in the battery sector.
“It could be possible to target batteries with the refinery,” he said.
The battery sector is an attractive market for anyone active in cobalt right now, with long-term growth expected to outpace that of many other industries.
And the refinery is just the start. GEM has plans to build a recycling park for products including end-of-life vehicles and electronic scrap in South Africa, he said.
For GEM, investment in Shu means a stepping stone to investing in Africa, Oehlers explained.
The recycling focus will also help GEM, a Shenzhen Stock Exchange-listed company, to continue to focus on environmental targets, Oehlers explained. GEM already had a strong recycling focus and was the first recycling company in China to be listed on an exchange.
China not a target Expansion plans may be ambitious, but Shu does not expect to target the Chinese market, where GEM is a dominant cobalt powder producer.
“I don’t see Shu selling [cobalt powder] in China any time soon,” he said.
One barrier to this market, he explained, is the import duty. Some other suppliers with material originating from other places do not have to contend with this, making it a tricky market to target.
Shu is more likely to build on its already strong positions in Europe and North America, as well as in Asia outside China, he said.
For more details on the deal, you can read Metal Bulletin’s analysis, here.