Chinese imports of lithium carbonate have increased by 59.3%
in the last four years, from 13,681 tonnes in 2013 to 21,794
tonnes in 2016. In February 2017, imports reached a multi-year
monthly peak of 2,632 tonnes (see Figure 1).
Average import prices have also risen sharply, increasing
72% from $5,019/tonne in 2013 to $8,634/tonne in 2016. In
February, average import prices stood at $9,935/tonne, although
this was down from a peak of $11,200/tonne reached in October
last year.
| Figure 1: Chinese lithium carbonate imports
January 2013-February 2017 |
 |
| Source: China
Customs |
Chile and Argentina together accounted for 99.3% of
China’s lithium carbonate imports in 2015, a share
which declined to 89.2% last year as new supply became
available elsewhere (see Figure 2). But in volume
terms, both countries still exported more lithium carbonate to
China than they did the year before, with volumes from Chile
increasing by 65.9% year-on-year (y-o-y) while those from
Argentina shot up by 119.9% compared
with 2015.
| Figure 2: Chinese lithium carbonate imports
by country January 2015-February 2017
|
 |
| Source: China
Customs |
As a major consumer of the chemical, China exports very
little lithium carbonate, despite having its own production
(see Figure 3). Exports last year were just 1,379
tonnes, although this was down from 2,463 tonnes in 2014 when
China’s own lithium consumption was relatively
weak.
Average prices for Chinese lithium carbonate exports have
surged by 186.5% from $7,423/tonne in 2013 to $21,267/tonne
last year, but this overall trend masks volatility in the
mineral’s price, which rose 161.1% from 2015 to
2016, peaking last June, since when it has slowly adjusted
downward.
China’s lithium carbonate production meanwhile
has been on a steep upward trajectory, rising from 38,000
tonnes in 2013 to 53,400 tonnes in 2016, according to data from
the China Nonferrous Metals Industry Association.
| Figure 3: Chinese lithium carbonate exports
January 2013-February 2017 |
 |
| Source: China
Customs |
Chinese lithium production
Sichuan province, where Sichuan Tianqi Lithium Industries
Inc. and several other Chinese lithium producers are based,
accounted for 52% of China’s total lithium exports
in 2016 (see Figure 4).
Japan received the largest share of Chinese lithium last
year, at 62.65% of total exports. But lithium production and
exports from other parts of China are now on the up. In July
last year, lithium exports from Jiangsu province, where Tianqi
and Australia-based Galaxy Resources Ltd both have processing
plants, jumped to 215 tonnes with an average price
$20,224/tonne.
| Figure 4: Lithium carbonate exports from
Sichuan Province Jan 15-Feb 17 |
 |
Source: China
Customs
|
| Figure 5: Chinese lithium carbonate exports
to Japan Jan 2015-Feb 2017 |
 |
| Source: China Customs |
Lithium hydroxide
China has traditionally been a net exporter of lithium
hydroxide, with outbound shipments of 9,834 tonnes in 2016
(see Figure 6). The average price of Chinese lithium
hydroxide exports doubled from $7,027/tonne in 2014 to
$14,053/tonne in 2016, peaking at $19,770/tonne last July.
Japan and South Korea together received 62.8% of
China’s lithium hydroxide exports in 2016 and
their import volumes rose by 23.1% and 59% y-o-y,
respectively.
| Figure 6: Chinese lithium hydroxide exports
2014-17 |
 |
| Source: China
Customs |
China’s lithium producers
Tianqi Lithium
Tianqi is the leading lithium company in China, with a
lithium concentrate capacity of 740,000 tpa and plans to expand
this to 1.34m tpa by constructing a second large chemical grade
lithium concentrate production facility, due to begin pilot
production in Q2 2019.
The company currently has lithium carbonate capacity of
10,500 tpa and lithium hydroxide capacity of 5,000 tpa at its
Shehong operation in Sichuan province, plus a further 17,000
tpa of lithium carbonate capacity at its Zhangjiagang base in
Jiangsu province. Both of these plants use spodumene produced
in Western Australia by Talison Lithium Ltd.
Tianqi is building a 24,000 tpa capacity lithium hydroxide
plant in Australia to process spodumene – a project
that is due for completion in October 2018. It also owns a
spodumene mining project in Sichuan, but this has delayed due
to multiple setbacks and currently does not have a target
start-up date.
Last year, the company reported revenue of Chinese renminbi
(Rmb) 3.9bn ($565.4m*), up 109% y-o-y, while its net profit
surged by 510% to Rmb 1.5bn ($217.5m).
Sales of its lithium chemical products totalled Rmb 2.8bn
($406m), a rise of 183.9% y-o-y. Tinaqi said higher sales
volumes of lithium carbonate and hydroxide were driven mainly
by sharp increases in the production of both electric vehicles
and battery cathodes in China, while shortage of supply
relative to growing demand helped push up prices.
Tianqi’s lithium carbonate prices rose on
average by 147% y-o-y in 2016 and hydroxide prices increased
178.3%.
Tianqi’s sales of primary lithium concentrate,
including chemical and technical grades, used respectively in
lithium chemicals (carbonate and hydroxide) and as additive in
glass and ceramics rose by a relatively modest 23.3% y-o-y
meanwhile to Rmb 1.1bn ($159.5m).
Looking ahead, the company expects that prices for high
purity lithium chemicals in China will remain strong due to
structural imbalances in the supply chain, which has seen major
investment into lithium salt production but comparatively
little in high-purity chemicals capacity. This will benefit
companies like Tinaqi that are able to producer high end
products and can leverage higher prices if shortages
emerge.
| Figure 7: China lithium hydroxide exports by
country (January 2015-February 2017) |
 |
| Source: China
Customs |
Ganfeng Lithium
Jiangxi Ganfeng Lithium Co. Ltd had 7,000 tonnes of lithium
carbonate capacity in 2016, along with 12,000 tonnes of
hydroxide 12,000 and 1,500 tonnes of lithium metal.
The company has just this year finished adding a further
15,000 tonnes of lithium carbonate capacity, currently still in
pilot production stage but expected to be fully operational by
the end of 2017. It is also building another 20,000 tonnes of
lithium hydroxide capacity, due to be completed by the end of
this year or early 2018.
Ganfeng also sells industrial grade carbonate but says that
current market demand for this product is low, especially when
compared with sales of battery grade material.
The company now sources its spodumene from the revamped Mt
Marion lithium project, in Western Australia, which it owns
jointly with Australian companies Mineral Resources Ltd and
Neometals Ltd. More than 30,000 tonnes of lithium concentrates
have been shipped from the mine to China this year after the
facility recommenced operations in 2016, with shipment volumes
expected to accelerate over the coming months.
Ganfeng has a 10,000 tpa spodumene mine in Jiangxi province
and stated recently that it is able to fully supply its
processing operations with raw material from its own captive
sources.
The company increased its revenues by 111% last year to Rmb
2.86bn ($414.7m) while its net profit grew by 265% y-o-y to Rmb
456.3m ($66.2m).
Adding capacity
China’s domestic lithium salt production relies
heavily on imported spodumene concentrates. According to the
China Nonferrous Industry Association, over 80% of these
imports come from Talison alone.
Many Chinese cathode producers have plans to expand
production following last year’s surge in demand
and prices, with a raft of new projects due to come online in
2018 and 2019.
New spodumene projects in Australia are expected to be able
to meet some of China’s rising lithium demand,
although teething problems at some producers, including Talison
which is expanding its capacity to 740,000 tpa, is causing
concern among Chinese buyers.
Although China is rich in lithium resources, with spodumene
deposits in Sichuan and Tibet, brine reserves in Qinghai and
Tibet and lithionite ores found in Jiangxi, many of these
resources have not been developed and China’s
lithium industry could not currently survive without
imports.
According to the China Nonferrous Industry Association, 70%
of the lithium production in China comes from imported
spodumene concentrates, 16% from domestic brine, 8% from
domestic spodumene concentrates and 6% from imported brine. In
2014-2015, domestic spodumene concentrates supply remained
steady at around 20,000 tpa, while imports stood at around
400,000 tpa, mostly from Talison.
The barriers China faces to developing its own lithium
reserves include the chemistry and accessibility of some of the
deposits. Brines in Qinghai have high magnesium content, while
Tibet’s deposits are at high altitudes and those
in Sichuan are close to towns and cities. As a consequence,
China’s imports of lithium raw materials are
expected to rise.
Many Chinese companies have already signed offtakes with
lithium juniors in order to tie up future supply as existing
sourcing arrangements are not likely to meet their growing
demand.