"With the increase in lithium carbonate production capacity, it is possible that prices may decline, and salt lake lithium extraction holds a cost advantage within the entire lithium industry," said the head of Cangge Mining recently. According to insiders from a domestic lithium salt company, the cost of lithium extraction from salt lakes is only 20,000 to 30,000 yuan per ton, and the extraction cycle is very short. Cangge Mining stated that the company's cost of selling lithium carbonate per ton is controlled at around 30,000 yuan.
On the other hand, the cost of lithium extraction from lithium spodumene and lithium mica is much higher. According to data on the cost of battery-grade lithium carbonate from Shanghai Nonferrous Metals Network, the cost per ton of self-mined lithium spodumene ore is approximately 60,000 yuan, self-mined lithium mica ore is approximately 60,000 to 80,000 yuan per ton, and externally sourced lithium mica ore is approximately 200,000 to 250,000 yuan per ton, while externally sourced lithium spodumene ore is approximately 300,000 to 320,000 yuan per ton.
Lithium carbonate prices have been continuously declining this year. According to SMM data, on October 9th, the average spot price of battery-grade lithium carbonate was 169,000 yuan per ton. This represents a more than 60% decrease from the high price of 600,000 yuan per ton at the end of last year. Currently, lithium carbonate prices have significantly dropped below the cost of lithium extraction from mined ores.
In recent years, major players in the battery industry, including CATL (Contemporary Amperex Technology Co. Ltd.), BYD, EVE Energy, and Guoxuan High-tech, have been actively investing in salt lake lithium extraction.
Battery Giants Racing to Expand
The declining prices of lithium carbonate highlight the strategic importance of salt lake lithium extraction, leading to an accelerated pace of expansion by battery companies. In June of this year, Bloomberg reported that CATL is investing $1.4 billion to collaborate with the Bolivian government to develop the country's lithium resources and build two lithium salt processing plants with a planned total capacity of 200,000 tons per year. It is expected that the total investment in subsequent projects will increase to approximately $10 billion by 2028.
It is worth noting that CATL will extract lithium from two salt lakes in southwestern Uyuni and western Oruro in Bolivia. According to available information, Bolivia possesses the world's richest lithium resources in salt lakes, with estimated reserves of 21 million tons, accounting for nearly a quarter of the global total.
BYD, a long-time competitor, is not lagging behind. In July of this year, BYD revealed that it is in negotiations with the Chilean government and the Chilean Chemical Industry Group (SQM) regarding a new salt lake extraction technology known as "direct lithium extraction." It is reported that BYD will obtain lithium carbonate produced by SQM at preferential prices, with an annual supply of 11,244 tons.
As per reports, BYD is in discussions with SQM to introduce the direct lithium extraction method, which uses resin as an adsorbent to extract lithium directly from salt lake brine, rather than pumping up large quantities of salt lake brine and storing it in evaporation ponds for a year or longer.
In fact, BYD's involvement in salt lake lithium extraction dates back to 2016 when it formed a joint venture with Salt Lake Holdings for a 6 million-ton lithium carbonate pilot project. Currently, the pilot project employs BYD's own lithium extraction technology. Salt Lake Holdings recently stated that BYD is still leading the pilot project, and specific construction plans will be negotiated after verifying the pilot project's results.
EVE Energy, another battery powerhouse known for its keen strategic sense, has also entered the salt lake lithium extraction sector. Last year, the company signed an agreement with BlueSky Technology to jointly participate in the development and utilization of lithium resources in the Jiaze Chaka Salt Lake in Tibet. According to the agreement, BlueSky Technology will encourage various project stakeholders to supply lithium salts to EVE Energy and its designated parties at competitive prices on a long-term basis. In addition, both parties will support the development of the joint venture company, aiming to make it a benchmark enterprise in the lithium salt processing field.
Guoxuan High-tech, which has been actively developing lithium mica mines in Jiangxi, has also not overlooked the development of salt lake lithium mines. In June of last year, Guoxuan High-tech signed an agreement with the National Energy and Mining Company of Jujuy Province, Argentina, to cooperate on local lithium mine resource security and the construction of lithium carbonate refining plants. The two sides decided to establish a joint venture company, with initial plans to build a production line with an annual capacity of 10,000 tons of battery-grade lithium carbonate, with future plans to expand to 50,000 tons.
Breakthroughs in Lithium Extraction Technology
Salt lake lithium is the largest reserve of lithium resources. Statistical data shows that among the known lithium resources worldwide, salt lake brine accounts for 58%, while lithium spodumene accounts for 26%. According to the 2022 report from the United States Geological Survey (USGS), the total known lithium reserves globally are estimated to be around 89 million tons, with major concentrations in Bolivia, Argentina, Chile, the United States, Australia, and China.
For China, in particular, salt lake lithium, as the largest reserve of lithium resources domestically, holds high strategic significance in ensuring a secure supply of lithium resources. Miao Wei, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) and Deputy Director of the Economic Committee, pointed out that China's salt lake lithium has significant development potential, especially in the efficient extraction of lithium from high magnesium-to-lithium ratio salt lake brine. Integration of resources, increased research and development of technological processes, and industrialization should be accelerated to develop production capacity.
In fact, China's salt lake lithium extraction technology has made significant advances in recent years. Salt Lake Holdings mentioned in its 2023 semi-annual report that its subsidiary, Blue Science Lithium, conducted trials and installation debugging for the "efficient recovery of lithium resources from low-yield lithium brine" in response to technical challenges during production. In June of this year, the industrial demonstration unit for the recovery of lithium from low-yield lithium brine with an annual production capacity of 6,000 tons of lithium carbonate successfully completed trial runs. Through preliminary pilot testing and industrial verification, overall lithium recovery rates have been further increased, marking another breakthrough in salt lake lithium extraction technology.
Recently, Blue Source Technology signed a long-term exclusive agreement for lithium-selective adsorbents with KTS, a subsidiary of the American KOCH Group, successfully promoting its self-developed DLE direct lithium extraction technology in the North American and European markets.
It is worth noting that in 2021, the world's first integrated lithium extraction project from original brine, jointly undertaken by Salt Lake Holdings and Blue Source Technology, was completed and put into operation. Last year, using critical adsorption technology provided by Blue Source Technology, the West Taijinai'er Salt Lake 2,000-ton/year adsorption method original brine lithium extraction project of Qinghai CITIC Guoan Lithium Industry announced successful production and acceptance. Additionally, Blue Source Technology secured a total contract for several thousand tons of original brine lithium extraction projects in Argentina, becoming the first local original brine lithium extraction project in Argentina.
In June of this year, Ganfeng Lithium announced that it had received a notification from its wholly-owned subsidiary's controlling subsidiary, Argentina's Minera Exar, that its Cauchari-Olaroz salt lake project had produced its first batch of lithium carbonate products. The company expects that, with the ramp-up of subsequent production capacity and process optimization, the project will gradually produce battery-grade products.
The Cauchari-Olaroz salt lake project is located in Jujuy Province, Argentina, with a total lithium resource of approximately 24.58 million tons of lithium carbonate equivalent (LCE), and Ganfeng Lithium has controlling rights to the project. The project initially plans to produce 40,000 tons of LCE per year in the first phase, with no less than 20,000 tons of LCE in the second phase, and the first batch of lithium carbonate products in this production capacity.
In addition, Zijin Mining recently announced that its subsidiary, Zijin Lithium Science, has achieved a significant breakthrough in a new process for increasing the brine evaporation rate. Through field tests at the 3Q salt field in Argentina, the lithium science division of the company has successfully doubled the brine evaporation rate and is expected to increase it by more than two times. The company stated that the successful testing of the new lithium science process is a major breakthrough in the bottleneck of salt lake lithium extraction technology, requiring only a small amount of additional equipment to significantly increase the brine evaporation rate and lithium carbonate production.
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