Lithium trade to transform

By Ma Jingjing Source:Global Times Published: 2017/8/16 17:53:39

Chinese raw materials firms look to Australian and African mines for expansion opportunities

Two employees at a plant in Yichang, Central China's Hubei Province, charge lithium-ion battery. Photo: IC

China is a country with large lithium carbonate reserves, with the figure standing at 17 million tons in 2016. But China still imports a large amount of the material used for lithium-ion batteries in new-energy vehicles, which an expert said is due to inadequacy in lithium exploitation mainly caused by geographical difficulties. Thus, many domestic lithium resource developers like Huayou Cobalt Co and Jiangxi Ganfeng Lithium Co have begun expanding overseas by making full use of lithium resources in Australia and Africa.

In spite of China's large reserves of lithium ore, the country still imports a large sum from Australia, Chile and Argentina at present due to huge demand.

The rapid growth of the domestic new-energy vehicle (NEV) market is driving the demand for battery-grade lithium compounds, which is directly boosting the need of lithium ore.

In the first seven months of this year, China produced 272,000 NEVs and sold 251,000, an increase of 26.2 percent and 21.5 percent year-on-year, respectively, data from the China Association of Automobile Manufacturers showed on Friday.

Industry and Information Technology Minister Miao Wei said in January that China's annual production of NEVs will reach 2 million in 2020 and the sales of NEVs will account for at least 20 percent of China's total car sales in 2025.

China consumes a large quantity of lithium carbonate for lithium-ion batteries, with almost half of the global output used by the country, Zhang Jiangfeng, secretary-general of the Lithium Industry Branch of China Nonferrous Metals Industry Association, told the Global Times on Monday.

Imports of lithium carbonate soared by 59.44 percent year-on-year to reach 15,261 tons in the first half of this year, with this figure including a great increase in imports from Chile and Argentina, according to data published in early August by Changjiang Securities.

Due to limited global supply of lithium and China's huge imports, lithium carbonate prices have been rising sharply in recent years, Zhang said. In October 2015, the price of lithium carbonate in China was less than 50,000 yuan ($7,480) a ton, but the figure skyrocketed to 140,000 yuan a ton in July this year, according to Shenzhen-based industry website

The annual demand of lithium carbonate and lithium hydroxide will grow to 785,000 tons by 2025 from the demand of 217,000 tons this year, Reuters reported, citing US consultancy firm Roskill.

To guarantee the supply of lithium carbonate to lithium battery production, China's largest electric vehicle manufacturer BYD has extended to upstream lithium exploitation.

BYD told the Global Times that it set up a joint venture in March with Qinghai Salt Lake Industry Co, based in Northwest China's Qinghai Province, and Shenzhen Zhuoyucheng Investment, based in South China's Guangdong Province. The new joint company will specialize in exploring, processing and selling salt lake resources.

According to BYD, it has made crucial progress in lithium-absorbent technology, which can be used to extract lithium from salt lake brine and is key to the commercialization of lithium extraction from salt lakes.

Exploitation difficulties

In fact, China had a large reserve of about 17 million tons of lithium carbonate in 2016, but due to difficulties in exploiting the resources, the country's lithium output was only 87,000 tons that year, Zhang said, noting most of the raw materials were imported.

Domestic lithium resources are mainly distributed in Northwest China's Xinjiang Uyghur Autonomous Region and Southwest China's Sichuan Province.

But exploitation of lithium has not been highly recorded in recent years because resources in existing mines in Xinjiang have become exhausted and mines in Sichuan have stagnated due to formality headaches, said Zhang.

In addition, lithium resources in Xinjiang and Sichuan are located at altitudes as high as 3,500 to 4,000 meters, which, together with undesirable facilities, make it hard to exploit lithium on a large scale, Zhang said, noting that exploitation of new mines in Xinjiang has only just begun.

Domestic leading lithium resource developers include Shenzhen-listed Tianqi Lithium, Jiangxi Ganfeng Lithium Co, based in East China's Jiangxi Province, and Yahua Lithium, a subsidiary of Shenzhen-listed Sichuan Yahua Industrial Group Co.

Tianqi's wholly owned Cuola lithium ore reserves are located in the Jiajika mine of Sichuan's Ganzi prefecture, which is considered one of Asia's largest spodumene reserve locations.

Tianqi Lithium declined to comment this week due to it being in a "sensitive period" before the release of its semiannual financial report.

The other two companies didn't immediately comment when reached by the Global Times on Monday.

Overseas expansion

Due to the difficulties attached to exploring lithium mines across China, many domestic lithium producers are beginning to explore lithium resources in Australia and Africa.

Huayou Cobalt Co, based in Tongxiang, East China's Zhejiang Province, announced on Monday that its subsidiary Huayou International Mining (Hong Kong) Ltd will buy an 11.2 percent stake in AVZ Minerals Ltd for A$13.02 million ($10.22 million).

AVZ is an Australian company engaged in mineral exploration in Africa. AVZ has a 60 percent interest in the Manono mine and surrounding areas located in the south of the Democratic Republic of the Congo, a country with rich lithium resources, according to a Huayou statement posted on the Shanghai Stock Exchange website.

In the statement, Huayou said that developing lithium battery materials is a priority for the company during the 13th Five-Year Plan (2016-20) period, noting that this deal will help explore lithium resources that are indispensable for lithium battery materials.

To solve the problem of raw material shortages, Jiangxi Ganfeng Lithium Co is also investing in lithium mines overseas. As of now, its wholly owned subsidiary GFL International owns a 43.1 percent stake in Australian mining company RIM, and is aiming to purchase another 13.8 percent of it.

While making full use of foreign resources, China should improve the recycling of existing lithium resources, Zhang said. "Currently, our country has done well in terms of technologies, but recycling mechanisms require improvements, for example, who recycles and how to recycle lithium batteries from discarded smartphones," he said.

At present, the development of lithium battery recycling in China is still in its early stage, domestic news site reported in June.

Next year will see a peak of recycled power batteries for NEVs, meaning the domestic discarded lithium-ion batteries recycling market will begin to take shape, said the report.

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