Shanshan Plans 5.1B Yuan Anode Plant Two Months After State Takeover

Following its acquisition by state-owned capital, Shanxi Shanshan Battery Materials Co., Ltd. (SH: 600884) appears to be regaining momentum.

Major Investment in Anode Materials

On the evening of September 22, Shanshan announced a significant investment plan. Its subsidiary, Inner Mongolia Shanshan Technology Co., Ltd., will build a 150,000-ton-per-year lithium-ion battery anode material integrated base project. The total investment is approximately 5.106 billion yuan, with fixed asset investment of about 4.318 billion yuan.

This marks the company's first major industrial investment since Anhui state-owned capital took control.

Market Reaction

On September 23, Shanshan's share price opened sharply higher, rising over 6% during the session. Trading volume surged to 938 million yuan, with a turnover rate of 4.32%. By the close on September 24, the stock stood at 11.54 yuan per share, giving the company a total market capitalization of 25.9 billion yuan.

Company Background

Founded in 1992 by renowned entrepreneur Zheng Yonggang, Shanshan started in the apparel business. In 1999, it pivoted into lithium battery materials and later became a global leader in anode materials.

However, in 2023, Zheng Yonggang died suddenly of a heart attack. Over the following three years, a series of control disputes erupted:

• A power struggle between Zheng's eldest son, Zheng Ju, and his widow, Zhou Ting
• Competition among various capital groups for restructuring control, involving:
• "Private ship king" Ren Yuanlin
• Liaoning's richest man Fang Wei
• China Baoan (SZ: 000009)
• Hunan Salt Industry Group
• Lithium giant Tianqi Lithium (SZ: 002466)
• Anode leader BTR (BJ: 920185)

Ultimately, Conch Group, a cement giant controlled by the Anhui State-owned Assets Supervision and Administration Commission (SASAC), emerged victorious. Through its subsidiary Wanwei Group, Conch invested over 7 billion yuan to gain control. On July 20, Shanshan's new board was successfully restructured, with the actual controller officially changed to Anhui SASAC.

Strategic Implications of the 5.1 Billion Yuan Expansion

This seemingly routine capacity expansion carries multiple strategic considerations:

1. Filling the Graphitization Capacity Gap

Shanshan currently operates two major plants in Baotou:

• Qingshan plant: 60,000 tons/year of finished anode products
• Jiuyuan plant: only 30,000 tons/year of graphitization capacity

Graphitization is a critical step in anode material production. However, Qingshan's finished product capacity far exceeds Jiuyuan's graphitization capacity, forcing heavy reliance on costly outsourced processing.

The new project addresses this gap directly. It plans 150,000 tons of integrated anode capacity, with 50,000 tons of dedicated graphitization capacity. Upon completion, total graphitization capacity will rise from 30,000 to 80,000 tons/year, better matching Qingshan's finished product capacity and significantly reducing outsourcing costs.

2. Capturing Market Demand

The anode material market is currently experiencing supply shortages. Shanshan stated that with rapid growth in global new energy vehicles and energy storage demand, its capacity gap is widening, necessitating the new integrated base to ensure customer order fulfillment.

The company's lithium battery materials business has already seen substantial profit improvement:

• 2025: Anode material sales volume up 26.76% year-on-year; net profit up 29.8%; maintained global No.1 market share in artificial graphite anode materials
• First half of 2026: Anode material sales volume up 54.92% year-on-year; artificial graphite market share stable at 21% globally

Key customers include global battery leaders such as CATL (SZ: 300750), BYD (SZ: 002594), LGES, ATL, and Ultium Cells. In June 2026, Shanshan disclosed that a new customer, Customer X, had become a major client for its anode segment, with sales of 1.519 billion yuan.

With strong demand and full order books, failing to expand would mean ceding customers to competitors.

Is Shanshan Truly Revived?

From the perspective of major investments and earnings turnaround, Shanshan is indeed experiencing a significant rebound.

Financial Performance

| Period | Revenue | Net Profit (Attributable) | Change | |--------|---------|--------------------------|--------| | First half of 2026 | 12.13 billion yuan | 822 million yuan | +296.73% YoY | | Full year 2024 | - | -367 million yuan (loss) | - |

The swing from a loss to nearly a threefold profit increase is dramatic.

Remaining Challenges

However, risks have not been fully resolved. Several hurdles remain:

1. High Interest-Bearing Debt Burden

As of the first half of 2026:

• Interest-bearing debt: 17.143 billion yuan
• Period-end cash: 3.815 billion yuan
• Cash and cash equivalents: 2.705 billion yuan
• Interest expense: 311 million yuan

Combined with the new 5.1 billion yuan investment, capital expenditure pressure during the construction period is significant. The company acknowledged in its announcement that "there may be a risk of insufficient fund raising."

2. Pending 1.9 Billion Yuan Lawsuit

On August 6, shortly after the state-owned takeover, Shanshan announced that subsidiaries Shanghai Lithium Battery and Yunnan Shanshan had been named as defendants by Yunnan state-owned capital, with claims totaling 1.954 billion yuan. The court hearing is scheduled for October 9, 2026. The outcome remains uncertain; an adverse ruling could impact both cash flow and reputation.

3. Intensifying Industry Competition

Within the past month, other companies have also announced large investments in anode material projects:

• Keda Industrial (SH: 600499): 4.5 billion yuan
• Zhongke Electric (SZ: 300035): 1.8 billion yuan

In such an expansion race, project payback periods may be extended.

Shanshan's new project requires 17 months from construction start to completion, with additional time needed for production ramp-up. During this period, changes in industry supply-demand dynamics could significantly lengthen the investment return cycle. The company specifically warned investors: "Project construction, commissioning, and capacity ramp-up require a certain period, during which there may be situations such as lower-than-expected downstream demand, intensified industry competition, declining product prices, and rising raw material prices."

Conclusion

From family infighting to state-owned takeover, from losses to a nearly threefold profit surge, Shanshan has undergone a dramatic transformation over the past three years. Going forward, how it addresses the 17.1 billion yuan debt burden, the 1.9 billion yuan pending lawsuit, and the tens of billions in industry expansion competition will determine whether it can truly "come back to life."