China lithium boom slows as sagging prices batter high-cost miners

Subject: Geography

Section: Eco geography

Context:

The decline in lithium prices, essential for electric vehicle (EV) batteries, is negatively affecting China’s lithium mining industry, particularly the mining of lepidolite, a type of hard rock ore costly to process into lithium.
Lithium is mined from ores of petalite (LiAl(Si2O5)2, lepidolite K(Li,Al)3(Al,Si,Rb)4O10(F,OH)2, spodumene LiAl(SiO3)2 and also subsurface brines.

Decreased lithium mining in China:

This trend is due to decreased EV demand globally, causing lithium prices to drop significantly—over 80% in the past year according to Benchmark Mineral Intelligence.
- Benchmark Mineral Intelligence also known as Benchmark Minerals, founded by Simon Moores in 2014, is a London-based IOSCO-regulated Price Reporting Agency (PRA) and specialist information provider for the lithium-ion battery to electric vehicle (EV) supply chain.
China, responsible for about a quarter of global lithium production in 2023, is expected to see a substantial impact on its lepidolite mining operations due to these lower prices and the high cost of extraction.
Rystad Energy has significantly reduced its growth forecast for China’s mined lithium output in 2024 to 12% from an initial 54%, mainly because of the challenges facing lepidolite mining.
The cost of processing lithium from lepidolite in China is significantly higher than from other sources like brine deposits and spodumene, making lepidolite mining economically unfeasible in the current price environment.

Lithium mines in China:

China, ranking fourth globally in lithium reserves, has been actively promoting investment to increase its lithium mining capacity, aiming to fulfil the battery sector’s demands and reduce import dependency.
A significant focus has been on the southern province of Jiangxi, known for its recent lepidolite projects.
These projects, such as CATL’s Jianxiawo mine and Yongxing’s Huashan mine, have been challenged by the lower lithium content in kaolinite, a clay mineral, making production costly at about 1,20,000 yuan per ton of lithium carbonate equivalent (LCE).
CATL acquired exploration rights for the Jianxiawo mine with an 865 million yuan bid.

Lithium Production in the World:

According to the US Geological Survey (USGS), global lithium production in 2019 stood at 77,000 tonnes.
Australia, Chile, China and Argentina are the world’s top four lithium-producing countries.
Australia is by far the world’s top producer of lithium, with an output of 42,000 tonnes in 2019.

About lithium

Lithium is a non-ferrous metal and is one of the key components in EV batteries.
It has the symbol Li and is a chemical element.
It’s a silvery-white metal with a delicate texture.
It is the lightest metal and the lightest solid element under normal circumstances.
It must be kept in mineral oil since it is very reactive and combustible.
It is both an alkali and a rare metal.

Lepidolite:

Lepidolite is a lilac-gray or rose-colored member of the mica group of minerals with the chemical formula K(Li,Al)3(Al,Si,Rb)4O10(F,OH)2.
It is the most abundant lithium-bearing mineral and is a secondary source of this metal. It is the major source of the alkali metal rubidium.
Lepidolite is found with other lithium-bearing minerals, such as spodumene, in pegmatite bodies.
It has also been found in high-temperature quartz veins, greisens and granite.

Source: TH