On June 10-11th , the 13th High-Tech Lithium Battery Industry Summit was held at the Hyatt Hotel in Shenzhen Airport. The theme of this summit was “market segmentation and industrial remodeling”. Over 500 senior executives from all sectors jointly discussed in depth trends and changes to the power battery industry in 2020.
Li Liangbin, chairman of Ganfeng Lithium, was one of the most anticipated presenters. Below is the relation from his speech.
He expects the global lithium battery market demand to grow rapidly in the next decade, to reach 1,000GWh by 2023. At the same time, the global demand for lithium is rising rapidly. It is expected that the annual demand for lithium will exceed 1 million tons in 2025.
In 2019, Talison (20%), SQM (14%), and Mt Marion (11%) ranked as the top three in the global market share of lithium raw materials; while the total output of lithium compounds was 376,000 tons, the top three companies were Albemarle (21%), Ganfeng Lithium (17%), SQM (13%).
At present, the price of lithium compounds is close to the cost price, and it is still under great downward pressure. In the next few years, the amount of salt lake lithium extraction is limited. It is expected that the supply will be short in 2023-2025, and there will be a short-term price increase. However, the production capacity of each lithium compound is rapidly following up, and it is expected that there will be only a two-year window of high prices.
For this reason, upstream lithium producers tend to sign long-term orders with mainstream vehicle manufacturers and power battery companies to lock in market share in advance and ensure the profitability of the company.
In this context, Li Liangbin made a detailed analysis of the distribution of lithium resources at home and abroad, and the current status of lithium resource development, and gave his own views and suggestions for the future development trend of lithium resources and market demand.
Lithium is one of the important raw materials for power batteries. The global resources are relatively abundant and the distribution is relatively concentrated. In 2019, the lithium resources were at 80 million tons, and the lithium reserves were at 17 million tons. Mainly in the lithium triangle of South America (Chile, Argentina, Bolivia), Australia and China, these top 4 regions account for 85% of the total reserves.
China’s lithium resources are mainly distributed in Qinghai, Tibet, Sichuan and Jiangxi. In 2019, domestic lithium resources amount to 4.5 million tons and lithium reserves are 1 million tons, of which salt lakes account for 78%, concentrated in Qinghai and Tibet, and the rest are lithium ore, scattered in Jiangxi, Sichuan, Xinjiang, Henan, and Hunan.
From the perspective of resource reserves and categories, the resource endowment of salt lakes abroad is far superior to that of China’s salt lakes, with large reserves and low magnesium-to-lithium ratio.
Domestically, it includes the Chaerhan Salt Lake, the East Taijiner Salt Lake, the West Taijiner Salt Lake, and the Zabuye Salt Lake. The mining companies include Salt Lake, CITIC Guoan, and Tibet Mining.
Hard rock lithium has become the main source of growth of lithium resources in recent years due to the easy replication of the mining and selection process and the rapid climb in production.
Internationally, the Greenbushes mine developed by Talison has large reserves and high grades, with a reserve of 178.5 million tons, an average grade of 2% Li2O, and a lithium extractive production capacity of 750,000 tons; followed by Galaxy Resources, with Mt Cattlin mine.
Li Liangbin introduced that domestic lithium mines mainly include Rongda Lithium, Dexin Mining, Tianqi Shenghe, Jinxin Mining, Jinchuan Oino, etc. Ganfeng currently has assets in Ireland, Mexico, Argentina, and Australia.
In 2019, the global total output of lithium mines was 77,200 tons (about 408,000 tons of LCE), of which Australia is 42,000 tons (about 222,000 tons of LCE), accounting for about 55% of the world.
In 2019, the global lithium salt production was about 380,000 tons (lithium carbonate equivalent), and the consumption was about 305,000 tons, of which the lithium battery consumption is the largest, accounting for 65%. Affected by the epidemic in 2020, lithium salt prices have continued to fall, and there are no obvious signs of a rebound.
From the perspective of regional distribution, there are four major lithium salt giants in Latin America: SQM, Livent (FMC), Albemarle and Orocobre. These four companies produced about 163,300 tons of lithium salt in 2019, accounting for 44.6% of global production.
Domestically, China’s total lithium salt production in 2019 is about 256,500 tons, and the top 5 companies in production are Ganfeng Lithium, Tianqi Lithium, Zhiyuan Lithium, Ruifu Lithium, and Southern Lithium. Different from the extraction of lithium from salt lake brines abroad, domestic lithium compounds mainly come from the extraction of lithium from hard-rock, accounting for about 86%.
Li Liangbin introduced that Ganfeng Lithium’s lithium compounds production in 2019 was 64,000 tons, its lithium salt production capacity is 85,000 tons, and its main resource is Mt Marion. At present, the company has lithium resources in China, Australia, Mexico, Ireland, and Argentina.
Overall, the top three in the global market share of lithium mineral resources are Talison (20%), SQM (14%), and Mt Marion (11%); while the total output of lithium compounds is 376,000 tons, the top three companies are respectively Albermarle (21%), Ganfeng Lithium (17%), SQM (13%).
Li Liangbin said that due to environmental protection pressures and energy bottlenecks, the trend of automotive electrification is irreversible. It is expected that the global lithium battery market demand will grow rapidly in the next decade, to nearly 1,000GWh in 2023. The global demand for lithium compounds is rising rapidly. It is expected that the annual demand for lithium compounds will exceed 1 million tons in 2025.
The price of lithium compounds that have been falling is close to the cost price. Battery grade lithium carbonate is 43,000 to 46,000 yuan/ton, while battery grade lithium hydroxide is 53,000 to 56,000 yuan/ton. In the next few years, the increase in salt lake lithium extraction is limited, mainly from lithium ore extraction. With the release of lithium salt products, there is still a situation of oversupply, and lithium prices are still under greater downward pressure.
Li Liangbin believes that lithium salt companies should provide support for the CATL, BMW, Mercedes-Benz, Volkswagen and other major battery companies and automotive OEMs. These companies have large demand, and they tend to sign “long term orders” to ensure a stable and high-quality supply of lithium raw materials. However, the threshold for enterprises to enter the first tier is relatively high, and they are sometimes constrained by resources and production and operation teams.
First, quality and technology should be leading, and a professional production team must be able to carry out quality and R&D requirements, as well as sufficient lithium feedstock to ensure continuity of production. At present, the investment in 10,000 tons of lithium compounds capacity is about 200 million yuan, and the investment required for 50,000 tons is more than 1 billion yuan.
At present, the capacity requirement for entering the first tier is more than 20,000 tons. The reason is that it is now supplying large enterprises, and the relatively safe supply ratio is 40%, which is more than 10,000 tons of production capacity.
Li Liangbin judged that in the next five years, lepidolite and China’s salt lake resources will reach the development bottleneck, with a total annual output not exceeding 300,000 tons of LCE. By 2025, the supply of lithium will reach 1 million tons. At that time, the supply will be weak, the expansion will slow down, and the demand will be accelerated. It is expected to form a second wave of short supply and the market is expected to usher in a rebound.
In the end, he made five suggestions: First, it is difficult to ensure normal operation because of limited lithium resources, so it is necessary to invest carefully in lithium mines and lithium compounds projects; second, to closely track new technologies, including cobalt-free, LFP, etc.; Downstream companies need to closely cooperate with battery factories; Fourth, they need to pay attention to safety and environmental protection to ensure sustainable development; Fifth, they must continue to maintain innovation, reduce costs, and ensure product quality.