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Blast at Chinese Battery Recycler Draws Attention to Industry’s Supply Chain Risks

2021-01-08 13:00:52

China's largest battery manufacturer has pushed to focus on safety issues following an explosion at a recycling facility, drawing attention to the risks in the industry's supply chain.

In the explosion at a factory of Hunan Brunp Recycling Technology Co. in Hunan province, one person was killed and six others were seriously injured, the local government. said on its official Weibo. Hunan Brunp is part of Guangdong Brunp Recycling Technology Co., a subsidiary of Contemporary Amperex Technology Co.

Brunp said in a statement on his WeChat that the explosion was caused by fire from discarded aluminum foil, adding that it will investigate any further potential hazards and ensure safe production in the future. The incident will have a limited impact on CATL's manufacturing and operations, and the company will strengthen its implementation of safety responsibilities and safety management, said a CATL representative.

The explosion is likely to rethink research into safety concerns in the use and recycling of batteries, an evolving industry in which metals are recovered for reuse from used packaging. Lithium-ion batteries – used in electric car toothbrushes and as energy storage for utility companies – are an important tool for curbing global emissions, but have occasionally caused fires that are difficult to extinguish.

A 2019 explosion at an Arizona energy storage facility injured multiple firefighters and, after a series of fires at facilities in South Korea, resulted in a world leader in battery manufacturing and deployment. A wave of electric vehicles last year also raised alarm, although proponents insist that models with combustion engines also pose a fire risk.

"The industry has always emphasized safety and market watchers are concerned about flammability issues in the supply chain," said Serafina Huo, an analyst at Shanghai Metals Market. "While the specific situation at Brunp is still under investigation, the incident has raised awareness and the need for care and safety in energy storage and battery recycling."

According to CATL's annual report, Hunan Brunp accounted for more than 10% of CATL's net profit in 2019. Guangdong Brunp Recycling has an annual waste disposal capacity of 120,000 tons, with a 99.3% recovery rate for nickel, cobalt and manganese. CATL shares fell 2.1% Friday.

The magnitude of the explosion's impact will depend on Brunp's stock, market sentiment, and whether there are wider safety inspections for the industry, Huo said.

–With the help of Chunying Zhang and Li Liu.

Copyright 2021 Bloomberg.

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