China is making a high-stakes bet on its expensive domestic lithium production. Siyi Liu and Dominique Patton report for Reuters:
Down a steep dirt road from the Baishi Huashan lithium mine in southern China, trucks laden with silvery grey ore rumble towards a cluster of smelters in the valley below that have sprung up to cash in on the electric vehicle battery boom.
The city of Yichun, China’s most prospective region for lithium, is ground zero in the country’s push to cut its reliance on imports of the metal for its battery industry, which makes three-quarters of the world’s lithium-ion batteries.
Mining the metal from a rock called lepidolite, Yichun aims to quadruple its output to about 350,000 metric tons of lithium carbonate equivalent (LCE) by 2025, or as much as the world’s top exporter Australia produced last year.
However, with much higher production costs than other Chinese mining regions, Yichun is the most vulnerable to the recent global fall in lithium prices, raising questions about how it will meet its target.
At the same time, concern is growing about the environmental impact of extracting lithium ore from lepidolite, which has already led Yichun authorities to shut some plants, further challenging the country’s drive for self-reliance.
Monthly output in Yichun has fallen by about a third after China moved to rein in a chaotic rush into the sector, while Beijing also slashed EV subsidies, which hit lithium demand and hammered prices.
“Many investments in Yichun are now at risk after prices fell this year,” said Yang Yaohua, an analyst at Guosen Futures.
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