Summary of lithium carbonate industry expert exchange: lithium carbonate market prices rebound, lithium mica lithium production capacity changes to key factors

Recently, the minutes of the industry survey on lithium carbonate resources were published. The minutes pointed out that currently, the lithium carbonate market price is rebounding, and supply and price fluctuations have become a focus topic. It is expected that the price of lithium carbonate will fluctuate in the range of 70,000 to 150,000 RMB/ton, with the bottom possibly reaching 70,000 RMB and the highest possibly rising to 150,000 to 160,000 RMB. The change in lithium mica's lithium extraction capacity is crucial for supply and demand balance. If the lithium carbonate production capacity in Yichun area is fully operational, it could supply the market with 200,000 tons, otherwise it could lead to a tight supply. In addition, the outlook for the new energy vehicle market is optimistic, with battery and vehicle production increasing, and the future penetration rate of new energy vehicles growing, with lithium batteries being used in various fields. From the supply and demand perspective, in terms of supply, global lithium resources supply is relatively stable, with salt lake companies currently having inventory of around 100,000 tons, and the year-end inventory is expected to be maintained at at least 70,000 to a high of possibly reaching 150,000 to 160,000 tons. Due to environmental checks in the Jiangxi region, the operating rate of mica is only 40%, and whether it can be increased will depend on the implementation of environmental protection measures and market price changes. Future forecasts show that by 2024, global lithium production capacity is expected to increase to 1.43 million tons, with Australia contributing about 500,000 tons, China about 430,000 tons, and China's salt lake production capacity estimated to be around 100,000 tons. In terms of demand, global lithium resource consumption was approximately 1 million tons last year, and if battery capacity increases by 200-300 kWh this year, along with growth in other areas of usage, consumption is expected to increase by about 35%, reaching approximately 1.3 million tons. Future forecasts show that by 2024, global resource consumption is expected to be around 1.37-1.38 million tons, and by 2025 it could reach around 1.83 million tons. Looking ahead to the market outlook, the development of lithium battery recycling technology is expected to economic benefits. Companies have developed effective solutions to extract lithium, cobalt, nickel, manganese, and other metals from waste lithium batteries and scraps, ensuring a supply of raw materials while addressing environmental issues. The issue of excess power battery inventory is being improved, with last year's high inventory leading to destocking activities. Consumption demand for lithium salt is expected to grow by 35% this year, but the likelihood of a sudden resurgence of inventory pressure is low. Q&A Q: How do resource experts view the recent changes in lithium carbonate prices, and what are the key influencing factors in the market? A: Prices are indeed difficult to predict. We learned from visits to multiple enterprises and material factories that prices may bottom out at 70,000-80,000, and in extreme cases may fall below 70,000. On the other hand, they could increase to 150-160,000. The change in lithium mica's lithium extraction capacity is crucial for supply and demand balance. For example, the start of mining operations at Contemporary Amperex Technology in Yichun could provide 200,000 tons of lithium carbonate equivalent: if it doesn't operate, the market could face a shortage. In addition, some enterprises in the Yichun region have lower costs, allowing them to start operations in low-price periods. Global lithium carbonate production is around 1.09-1.1 million tons, with consumption around 1 million tons, and not much inventory, only about a month's usage. Demand growth continues. The outlook for the new energy vehicle market is optimistic, with growth in battery and vehicle production, as well as the future penetration rate of new energy vehicles, with lithium batteries being used in various fields. Q: How is the current capacity utilization of the industry? What impact do small mines have on the market? A: On-site research shows that most enterprises in the Yichun area were shut down during the Chinese New Year, with 40% of them resuming operations but not at full capacity. Mines in Australia also experienced production cuts. The fall in the US dollar price has affected mineral production in Africa. Concerns about market oversupply due to potential new capacity additions by 2024 to 2025 may have been exaggerated because many projects have actually been slowed down or delayed. Q: How were the recent market price changes formed? A: The recent changes in prices were driven by the futures market. The continuous rise in futures prices led to an increase in spot prices. Lithium salt companies also raised their spot prices, partly because they chose to sell products through the futures market. This directly led to insufficient supply in the market when actual purchases were made. If prices continue to rise, companies that were previously waiting on the sidelines might choose to start operations because they have low-cost raw materials, increasing market supply. To sum up, the price fluctuations of lithium carbonate are quite significant and difficult to predict accurately. Market supply and demand balance, the development of the new energy vehicle market, the growth rate and production capacity of global lithium, trends in the futures market, and operational decisions of lithium enterprises are all key influencing factors. Q: How is the current supply situation of lithium resources? A: From a personal perspective, the supply situation is still acceptable. Considering inventory factors, global lithium resource supply is around 100,000 tons, with the lowest possibly reaching 70,000 to 80,000 tons, and the highest possibly reaching 150,000 to 160,000 tons. This is the current basic market situation. Q: What is the current situation and future outlook of Jiangxi mica supply affected by environmental checks? A: Environmental checks in Jiangxi are strict, with multiple enterprises shutting down for inspections and technical upgrades. Before and after the Chinese New Year, some enterprises still had inventory, and the downward trend in prices made raw material procurement more cautious, resulting in an operating rate of just over 40%. Currently, enterprise production is affected by the Chinese New Year holiday and the rainy season. Additionally, during the Two Sessions period, some enterprises chose to delay the resumption of work until the end of March or even April. Before resuming operations, enterprises need to carry out environmental rectification to handle wastewater and hazardous waste issues. If costs remain unsatisfactory and production is still a loss, they will not easily resume operations. Q: What is the production cost situation of Jiangxi mica? A: The production costs of Jiangxi mica can be divided into several categories. Enterprises with good ore grades, such as Yongxing Special Steel and Jiuling Lithium, have lower production costs, possibly around 50-60,000 RMB in total. But for some enterprises with lower ore grades, production costs could be as high as 100-120,000 RMB. The cost of enterprises that purchase raw materials externally is influenced by the purchase price of raw materials, sometimes costing only 60-70,000 RMB, other times 110-120,000 RMB. Q: How do you view the resource supply for 2024? A: It is estimated that the global resource supply in 2024 will be around 1.43 million tons. The resource supply in Australia for 2024 is expected to reach 500,000 tons of lithium carbonate. The supply in China is expected to reach 430,000 tons, with around 1,000 tons coming from.The estimated reserves of spodumene are around 300,000 tons, and around 100,000 tons for salt lakes. If China manages well and incorporates recycling, the supply could potentially reach around 430,000 tons.A:The expected production of lithium resources in Chile and Argentina? A: It is estimated that Chile's Albemarle and HM may reach a production of 250,000 tons by 2025, while SQM has already reached 170,000 tons in 2023, and other companies around 50,000 tons. We are committed to reaching 270,000 tons by 2025. As for Argentina, the newly merged companies such as Orocobre and Livent produced 18,000 tons and 22,000 tons respectively last year, and we estimate that Argentina could reach a production of 70,000 tons by 2024. Q: How about the expected lithium resources production in Africa, Canada, and other countries? A: It is possible for lithium resources production in Africa, including mines in Zimbabwe and other new exploration projects, to reach 200,000 tons by 2025. In Canada, including lithium recycling resources, production is expected to reach 50,000 tons. We also predict Canada could achieve a total of 30,000 tons of recycling, while other countries are expected to contribute around 20,000 tons. Overall, we expect global lithium resources production to reach 1.86 million tons by 2025. Q: How much is the expected global resource consumption for 2024? How does it compare with 2025? A: We predict that global resource consumption in 2024 will be approximately 1.37-1.38 million tons, while in 2025 it could reach around 1.83 million tons. This consumption forecast is based on statistics and estimates on battery market and industrial sector demands. Q: What was the global consumption of resources in lithium batteries last year, and how is the resource utilization assessed? What is the basis for this year's forecast? A: The global consumption of lithium resources was approximately 1 million tons last year. Our assessment of resource utilization is based on estimates of battery production and demand in other sectors such as alloys. If battery capacity increases by 200-300 kilowatt-hours this year, along with growth in usage in other sectors, we could achieve a 35% increase, which is approximately 1.3 million tons of consumption. Q: How was the global production of lithium batteries last year? What is the growth expectation for this year? A: We estimate that global lithium battery production was around 1,200 gigawatt-hours (GWh) last year, and this year it could reach 1,500 to 1,600 GWh. This means the growth rate could be between 20-30%. Most of the growth is expected to come from demand in the battery sector. Q: Is the forecast based on capacity or production? Why do you feel optimistic about next year's forecast? A: Our forecast is based on actual production rather than capacity. For example, Chinese production could reach 3 million tons by 2023. Our optimistic forecast is based on statistics of positive electrode material production and estimates of demand for lithium hexafluorophosphate in electrolytes. Therefore, we believe that this demand growth is achievable. Q: How is the growth of lithium battery and resource demand this year? A: Based on the demand in the battery sector and other industrial sectors last year, there was approximately a 25% growth. However, due to the significant increase in battery production and the emergence of new demand, a higher growth rate could be achieved. Q: How is the current level of lithium resource inventory domestically and internationally? A: Currently, the domestic lithium resource inventory is approximately 70,000 to 80,000 tons, with some overseas reserves including those in transit and in enterprise warehouses. Overall, the inventory levels are normal, roughly equivalent to over a month's worth of consumption. There hasn't been any significant change compared to the past. Typically, inventory is either stored at the positive electrode material factory or battery factory, or within production enterprises. Currently, the inventory is slightly higher in production enterprises, resulting in a slightly shorter inventory turnover period for material factories. Additionally, it is important to note that there may be some inventory in long-term storage certificates. Q: How many companies in the industry are involved in futures trading? A: Currently, it is quite common for lithium salt production companies to participate in futures trading. Some companies have achieved good sales performance through futures market sales last year, and it can be said that most of the products are sold through futures. Recycling companies also have very good product quality, and similarly, most products are sold through the futures market. As for material factories, although some participate in futures trading, their level of participation is not as high as that of lithium salt companies. Q: What are the main environmental challenges faced in resource mining? Is mica mining in Jiangxi more environmentally challenging than in other regions? A: Resource mining faces certain environmental challenges. For example, salt lake mining also has environmental issues, which are related to the characteristics of mineral deposits in different regions and production processes. For instance, the lithium mica in Jiangxi produces a significant amount of tailings that are difficult to handle due to the use of low-grade raw materials and recovery roasting processes. In addition, lithium mica ore may contain toxic and harmful elements, which adds to the difficulty of environmental treatment. The slag produced from lithium mica mining is also a problem, especially as new cement industry standards will strictly control the use of lithium slag, increasing the cost of slag handling. While salt lake lithium extraction may have relatively fewer environmental problems, both ore and salt lake lithium extraction involve water and air treatment issues. Q: How much does environmental issues affect the cost of lithium resource mining? A: Environmental issues do indeed lead to increased costs. Addressing environmental problems in salt lake extraction tends to have lower costs. Lithium mica mining, due to the generation of a large amount of lithium slag, may face significantly increased costs. If calculated based on the cost of handling the slag, it could increase costs by one to two thousand RMB. If the slag contains toxic elements, its treatment becomes more complex and expensive, requiring safe disposal. Q: How does current policy balance environmental protection and industrial development? Will it affect production? A: Some environmental issues arose last year, and local governments took them seriously, actively seeking methods to achieve compliance or utilization of waste materials. Generally, companies are able to meet standards when constructing production lines or in acceptance inspections. For new issues, the government provides a buffer period or temporary solutions. In the short term, companies may only face some changes in costs, such as increased transportation costs due to centralized storage. However, overall, these changes will not have a significant impact on the overall production volume. In the future, companies and industry associations need to negotiate with relevant industries and departments to find solutions, such as handling waste according to solid waste or hazardous waste standards. Q: Will the cost of recycling lithium resources be very high? If the price of lithium carbonate reaches around 70,000, will it affect the amount of recycling?"Je vais l'cole demain." I am going to school tomorrow.A: The relationship between resource recycling and cost is not direct. Whether for export to the EU or domestic demand in China, there are good solutions for the recycling of waste lithium batteries. Currently, there are recycling solutions not only for lithium, but also for nickel, cobalt, manganese, and other materials, with better solutions in place. If proper classification is done in the early stages, extracting materials directly from batteries for reuse is feasible. We are committed to efficiently utilizing all resources, including phosphorus, iron, negative electrode materials, etc. If recycling is done properly, it not only solves environmental problems but also ensures a stable supply of raw materials. Q: What is the current level of inventory for power batteries? With the expected growth in salt consumption, will there be inventory pressure on batteries this year? A: By the end of 2022 and the beginning of 2023, the inventory level of batteries is relatively high, covering about 4 to 5 months of demand. Some of the inventory from last year has already decreased, with a large export volume. In the future, the energy storage sector, especially household energy storage, will bring significant consumption potential. It is expected that the inventory pressure this year will not manifest as predominantly as in the first half of last year; there will certainly be some inventory, but not a severe situation. Q: Will the lithium futures market have an impact on actual demand? A: The futures market sometimes reflects the supply and demand relationship, but other times it is not directly linked to actual supply and demand. Lithium salt producers and recycling companies use the futures market for hedging to lock in prices and hedge risks. Some companies may decide whether to sell lithium products based on futures prices and when to sell. Sometimes companies may sell lithium products not yet produced or stop losses when prices are right through the futures market, but this does not mean physical resources have been consumed; the physical resources still exist. In reality, the futures market mainly serves the purpose of hedging, and the amount of physical delivery is usually small. Q: What are the extraction technologies for lithium resources in Chinese salt lakes? What recognized lithium extraction technologies are there in the Qinghai region? A: There are various types of salt lakes in China, Qinghai's salt lakes refer to underground brine, not just Qinghai Lake itself. The most common substance after lithium extraction is sodium chloride. Then, lithium chloride and lithium sulfate are obtained through evaporation, followed by the production of lithium fertilizer using ore dressing technology. The remaining solution with high lithium concentration is separated using a mixing technology to extract lithium components. Currently, the widely recognized and used extraction technology in Qinghai region is adsorption with membrane technology, which involves initial adsorption, thorough impurity removal with membrane tension, and finally concentration and precipitation. This process not only produces high-quality products but also has gained recognition across the industry. Q: What are the lithium extraction technologies and challenges faced in the Tibetan region's salt lakes? A: In the Tibetan region, there is a difficulty in power supply for industrial-scale production due to a reliance on civilian power sources. The scale of production requires a large amount of power, but Tibet's electricity is mainly for civilian use. In the past, the Tibet Mineral Development Phase II project required several billion RMB of investment in power supply. The current technologies in Tibet mainly involve solar pool methods, as well as techniques involving sodium membranes and lithium membranes. However, the production process may generate byproducts like manganese, requiring additional processing. Zijin Mining Group has achieved a production output of 20,000 tons of lithium hydroxide, but still relies on diesel generators with limited output. Overall, to significantly increase production in Tibet, it may take several more years. Currently, the lithium extraction technology in Tibet faces challenges in improving efficiency and reducing costs. Q: How do Chinese companies in the lithium extraction industry compare in terms of technology and skills with international giants? A: In terms of extraction technology and costs, Chinese companies may slightly lag behind international stalwarts such as SKM and Albemarle in product quality, but they have lower production costs. While small and medium-sized enterprises may only be able to handle certain processes, there are many Chinese companies that can complete the entire lithium extraction process. Overall, Chinese companies have made significant progress in reducing costs and increasing lithium extraction efficiency. It is important to note that in some places, the establishment of salt fields is not allowed, leading to low raw material concentrations and large processing volumes, requiring greater equipment investment.