China has long bucked many
global economic and industrial trends. Lithium is no different.
While the world in the mid-1990s became reliant on lower cost
lithium derived from South American brine, China continued
using spodumene concentrate as its primary source.
It is a trend that has not
really changed and one totally at odds with global consumption
Chinas lithium industry
has been active since the 1950s, but only in the 1980s became
significant following a rise in demand for consumer driven
Lithium was sourced from a
spodumene and lepidolite mine located in the northern part of
Xinjiang and Jiangxi provinces. As the 1980s drew to a close,
imported spodumene from Australia became the main raw material
source for the Chinese lithium industry together with smaller
quantities of spodumene from Sichuan province.
This situation was turned on its
head in the mid-1990s when Chiles SQM started to produce
technical grade lithium carbonate priced below $2000/tonne.
This hit most spodumene based lithium producers chemical
convertors very hard and only a handful survived.
Today, owing to rapid market
development of the lithium-ion battery and various
pharmaceutical applications, some entrepreneurs have started to
venture into the downstream lithium business.
In the meantime mothballed
spod-umene mines have been restarted in addition to new brine
operations following a lithium carbonate price rise to over the
Limited sources, downstream focus
Lithium brine production is mainly located in the remote Tibet
and Qinghai provinces. Projects in East Tajinaier, Qinghai
province and Zabuye, Tibet started as far back as the early
1990s before industry leaders SQM and FMC entered the
These lithium projects fell far behind their original
production targets however. Zabuye struggled with a lack of
infrastructure and difficulty in operating at high attitudes.
Qinghais lithium production was delayed due to challenges
removing the high magnesium content.
Qinghai Lithium now has the
ability to make good technical grade lithium carbonate from
high magnesium-lithium ratio brine but only in limited
The majority of active spodumene
mines are located in Sichuan province. The reserves in this
region hold Li2O contents between 1-1.5% and are producing
spodumene concentrate with Li2O levels of 5.5%. Most of the
mines are owned by lithium chemical producers as a feedstock
source. China has no independent spodumene supplier
A lepidolite mine located in Yichuan, Jiangxi province was used
to supply raw material for producing lithium hydroxide in the
late-1990s for the domestic ceramic industry.
China is now experiencing a new
wave of lithium expansions in the wake of lithium-ion battery
demand from portable electronics and the promise of an electric
Chinas conventional end
uses for lithium includes glass, ceramics, lithium-bromide
absorption air-conditioners, aluminum smelting, steel casting
protecting powder, and lubricant grease.
The country is experiencing
growth in many of these areas particularly the glass industry,
a trend which opposite to industry outside of Asia.
Lithium processing companies in
this sector are: Tianqi Lithium, Xinjiang Lithium, Citic Guoan,
and Zabuye. Ganfeng Lithium is the leading producer of lithium
chloride in China.
Jiangxi province-based Ganfeng Lithium has established a
of producing lithium metal and
derivative products, high purity lithium carbonate and
lithium-fluoride for electrolyte production, and other
specialties. The company was listed on Shenzhen Stock Exchange
in August 2010 the first pure lithium company to be
listed in China.
Tianqi used to have the majority
share of battery grade lithium carbonate in the domestic
cathode market but now this is shared by Ganfeng Lithium and
Pan Asia Lithium.
Both Ganfeng Lithium and Tianqi
are importing raw material. Tianqi is 100% reliant on spodumene
from Talison in Australia, although the company has announced
an investment into a fully owned spodumene mine in Sichuan
province and a holding in a pre-production project in Canada
owned by Nemaska Exploration.
The company has increased its
number raw material sourcesto include concentrated lithium
brine, spodumene, lepidolite and recycled material. Theuse
spodumene and lepidolite are the new measurements to increase
the source of lithium.
It has also started securing international raw
materials sources through an investment in Argentine brine
developer International Lithium Corp.
Chinas lithium industry is in a unique position
and is unlike other major markets in Japan and South Korea.
China has a large lithium chemical production capacity, which
often exceeds domestic demand. This enables the country to cope
with demand increases while remaining competitive.
With a significant VAT barrier on imports and exports
Chinese companies are reluctant to trade outside of its
Lithium, the worlds leading spodumene miner, relies on
the Chinese market as its business driver. An expected boom in
demand resulted in an expansion of its Greenbushes mine to
320,000 tpa. A second phase expansion has also been approved
which will take concentrate capacity to 720,000 tpa and make
Talison Lithium the worlds largest lithium carbonate
equivalent producer at 110,000 tpa.
Exporting higher value
China is moving towards exports
of higher value products across all industries. For example
lithium battery exports enjoy a 17% tax refund whereas for
basic lithium chemicals it is 0%, some products even have an
As a result Chinese exports of higher-value lithium chemicals
Consolidation in the industry
will also become a rising trend. Small lithium companies in
niche markets will merge with bigger lithium players,
particularly those publically listed with financial clout.
With the high hopes for EV
demand and energy storage, the lithium industry has attracted
significant investment in recent years. The existing players
will increase their capacities. Brine projects in Qinghai and
Tibet will have a significant increase in output over the next
Galaxy Resources will be
producing battery-grade lithium carbonate at its Jiangsu
chemical plant using spodumene concentrate source from its Mt
Cattlin mine in Australia. This will be Chinas first
purpose build battery grade lithium plant. Production from new
spodumene projects will also enter the market soon.
With the Chinese Government keen to support to new energy
industries, China will maintain its growth status in
Wang Xiaoshen is vice chairman and vice president
of Chinese lithium producer, Ganfeng