China's Putailai Cancels Sweden Battery Anode Project Amid Regulatory Hurdles

Shanghai Putailai

Chinese battery anode material manufacturer Shanghai Putailai has announced the termination of its planned battery anode material project in Sundsvall, Sweden, after failing to secure approval from the Swedish government. The decision, disclosed on December 19, follows extensive regulatory reviews and negotiations regarding investment conditions.

The project, initially designed to have a production capacity of 100,000 tonnes per year (t/yr), was expected to roll out in two phases: 50,000 t/yr by 2025, followed by another 50,000 t/yr by late 2026 or early 2027. Putailai had earmarked a maximum investment of 15.7 billion Swedish kronor ($1.4 billion) for the venture, which was part of its broader strategy to expand outside of China.

Regulatory Hurdles and Project Termination

Putailai’s foreign direct investment (FDI) declaration was submitted to Sweden’s Strategic Products Supervision Bureau in February 2024, with an official review beginning in June 2024. However, on December 3, the Swedish government imposed conditions regarding equity control, management composition, intellectual property rights, and corporate supervision for Putailai’s Swedish subsidiary, Zichen Sweden.

After failing to reach an agreement on these terms, Sweden ultimately rejected Putailai’s investment application, though specific reasons were not disclosed. The company had already invested 14 million yuan ($1.9 million) in a feasibility study, though it noted that this cost would not impact its operations.

Expanding Anode Production in China Amid Western Setbacks

Despite the setback in Sweden, Putailai remains committed to increasing its anode material production capacity. The company reported 68,197 tonnes of anode material sales in H1 2024, marking a 24% year-on-year increase. It currently operates 150,000 t/yr of total capacity and is constructing an additional 100,000 t/yr plant in Qionglai, Sichuan province, set to launch by the end of December.

Several Chinese battery material firms, including Shanshan, have sought expansion into Europe, with Shanshan planning a 100,000 t/yr anode production complex in Finland to cater to overseas demand. However, geopolitical uncertainties and economic challenges have created obstacles for Chinese firms seeking foreign investments and partnerships.