2024 China Lithium Industry Development Report 1

2024 China Lithium Industry Development Report

Abstract: This report covers five aspects: an overview of the development of the world's lithium industry in 2023, the current status of China's lithium industry development in 2023, an analysis of the economic operation of China's lithium industry, the issues that need to be paid attention to in the current development of China's lithium industry, and the key points for the next development of China's lithium industry. Based on the results of on-site research conducted by China Lithium High tech Co., Ltd,

one

Overview of World Lithium Industry Development in 2023

According to the EVTank White Paper on the Development of China's New Energy Vehicle Industry (2024), global sales of new energy vehicles reached 14.653 million units in 2023, a year-on-year increase of 35.4%. Among them, the sales of new energy vehicles in China reached 9.495 million, accounting for 64.8% of global sales. The sales in the United States and Europe were 2.948 million and 1.468 million, respectively, with year-on-year growth rates of 18.35% and 48.0%. In 2023, China's production of new energy vehicles reached 9.857 million units, a year-on-year increase of 35.8%. Among them, 1.203 million new energy vehicles were exported, a year-on-year increase of 77.6%, providing diversified consumption choices for global consumers. The export of power batteries reached 127.4 GWh, a year-on-year increase of 87.1%.

New energy vehicles continue to grow rapidly, and the use of lithium in energy storage and 3C fields continues to grow, stimulating global exploration and development of lithium resources. The production capacity of products such as lithium carbonate, lithium hydroxide, lithium battery cathode materials, and lithium batteries has rapidly expanded, with some production capacity showing overcapacity and product prices continuously declining. Some cathode material enterprises have incurred significant losses.

More and more lithium resource projects are being explored and developed, and the world's lithium resources and reserves have increased to a certain extent. According to the latest data from the United States Geological Survey in January 2023, the world's lithium resources are about 98 million tons; Lithium reserves are 26 million tons (metal content, converted to lithium metal and lithium carbonate at a ratio of 1:5.3, equivalent to lithium carbonate equivalent exceeding 130 million tons), as shown in Table 1.

The distribution of lithium resources in the world is uneven, mainly concentrated in countries such as Bolivia, Argentina, the United States, Chile, Australia, etc. However, lithium resources in Bolivia and the United States have not yet been developed on a large scale. Due to the distribution of resources, there are significant regional differences in the production of lithium mines (including salt lake lithium mines and solid lithium mines). Australia is the largest supplier of lithium mines, accounting for approximately 87% of the world's lithium ore supply and 39% of the world's total lithium raw material supply. Although China's lithium resources are among the top in the world and the variety of resources is relatively abundant, compared to China's lithium salt production capacity, the dependence on foreign lithium raw materials is relatively high. In 2023, about 57.5% of lithium raw materials need to be imported.

The main producers of basic lithium salts such as lithium carbonate, lithium hydroxide, and lithium chloride in the world are China, Chile, and Argentina. In addition, Australia and South Korea have established production capacity for lithium hydroxide using spodumene concentrate. Countries such as the United States, Russia, and Japan use industrial lithium carbonate and lithium chloride to produce products such as lithium hydroxide and metallic lithium.

In 2023, the world's production of lithium and its derivatives was equivalent to approximately 1.086 million tons of lithium carbonate equivalent (LCE), a year-on-year increase of about 26%. The increase in production was mainly from China, Chile, and Argentina. The total production of spodumene concentrate in Australia is approximately 3.6 million tons. It is expected that the world's production of lithium and its derivatives will reach 1.4 million tons of LCE in 2024, and approximately 2 million tons of LCE in 2025.

The United States and the West have implemented measures such as the Inflation Reduction Act, the EU Key Raw Materials Act, and the EU Battery and Waste Battery Act, vigorously supporting the development of local enterprises through subsidies and other means, and rebuilding a new energy supply chain system centered on the United States and the West, aiming to exclude China and restrict its development. In addition, the temporary guidelines released by the US Treasury and Department of Energy on December 1, 2023 state that starting from 2024, electric vehicles containing battery components manufactured or assembled by so-called "foreign entities of concern" (FEOCs) will not be eligible for tax credits. In addition, starting from 2025, vehicles must not contain key minerals extracted, priced, or recovered by FEOC, including lithium, cobalt, and nickel.

two

Current Development Status of China's Lithium Industry in 2023

（1） Overview of Economic Operation

According to data from the China Association of Automobile Manufacturers, in 2023, the production of new energy vehicles in China reached 9.857 million units, with sales reaching 9.495 million units, an increase of 35.8% and 37.9% year-on-year, respectively, and a market share of 31.6%. In 2023, the cumulative production of pure electric vehicles was 6.704 million units, a year-on-year increase of 22.6%, and the cumulative sales were 6.685 million units, a year-on-year increase of 24.6%. In 2023, the cumulative production of plug-in hybrid vehicles was 2.877 million units, a year-on-year increase of 81.2%, and the cumulative sales were 2.804 million units, a year-on-year increase of 84.7%. In 2023, the cumulative production of fuel cell vehicles was 6000 units, a year-on-year increase of 55.3%, and the cumulative sales were 6000 units, a year-on-year increase of 72.0%. China's production and sales of new energy vehicles account for over 60% of the world's total, ranking first in the world for nine consecutive years; The export of new energy vehicles reached a record high of 1.203 million units, a year-on-year increase of 77.2%.

According to the China Automotive Power Battery Industry Innovation Alliance, in 2023, the total cumulative production of power and energy storage batteries in China was 778.1 GWh, a year-on-year increase of 42.5%. Among them, the cumulative production of ternary batteries was 245.1 GWh, accounting for 32.1% of the total production, a year-on-year increase of 15.3%. The cumulative production of lithium iron phosphate batteries was 531.4 GWh, accounting for 67.5% of the total production, a year-on-year increase of 59.9%. In terms of loading volume, in 2023, the cumulative loading volume of power batteries in China was 387.7 GWh, a year-on-year increase of 31.6%. In terms of enterprises, the top five domestic power battery companies with installed capacity in 2023 are CATL, BYD, Zhongchuangxin Aviation, Yiwei Lithium Energy, and Guoxuan High tech, with installed capacity of 167.1 GWh (accounting for 43.1%), 105.5 GWh (accounting for 27.2%), 32.9 GWh (accounting for 8.5%), 17.3 GWh (accounting for 4.5%), and 15.9 GWh (accounting for 4.1%), respectively.

Domestic lithium ore resources are mainly located in Sichuan, Xinjiang, Jiangxi and other places. Lithium resources are also found in Inner Mongolia, Hunan, Yunnan and Henan. Salt lake lithium resources are mainly located in Qinghai and Xizang. At present, lithium resources in salt lakes under development are mainly concentrated in Qinghai and Xizang, and lithium ore mining is mainly in Sichuan, Jiangxi, Xinjiang and other places. In 2023, China utilized domestic salt lake brine, lithium mica concentrate, spodumene concentrate, and recovered lithium containing waste to produce lithium salts equivalent to approximately 347000 (287+6) tons of lithium carbonate.

In 2023, China's lithium carbonate production exceeded 500000 tons, a year-on-year increase of 30.6%, with nearly 20 enterprises producing over 10000 tons of lithium carbonate. The top five enterprises in terms of lithium carbonate production are Zhicun Lithium Industry Group Co., Ltd., Tianqi Lithium Industry Co., Ltd., Qinghai Salt Lake Lanke Lithium Industry Co., Ltd., Shengxin Lithium Energy Co., Ltd., and Jiangxi Yongxing Special Steel New Energy Technology Co., Ltd.

In 2023, the Anju Factory of Tianqi Lithium Industry Co., Ltd. completed and put into operation the 20000 ton battery grade lithium carbonate project, and the 60000 ton battery grade lithium carbonate project of Ruoqiang Zhicun Lithium Industry Co., Ltd. was completed, as shown in Table 2. Several enterprises, including Guangdong Bangpu Recycling Technology Co., Ltd., Greenmei Co., Ltd., and Hunan Jinkai Recycling Technology Co., Ltd., have built production lines for waste batteries and battery waste to produce lithium carbonate or lithium hydroxide.

In 2023, China's production of lithium hydroxide reached 326000 tons, a year-on-year increase of 30.1%. The top five companies in terms of production have a market share of over 75%. The five companies are Suzhou Tianhua New Energy Technology Co., Ltd., Jiangxi Ganfeng Lithium Industry Group Co., Ltd., Jiangxi Yabao Lithium Industry Co., Ltd., Sichuan Yahua Industrial Group Co., Ltd., and Shengxin Lithium Energy Group Co., Ltd.

In 2023, the production of anhydrous lithium chloride directly from spodumene concentrate or salt lake brine in China is about 18000 tons, and some enterprises produce lithium chloride from recycled raw materials or crude lithium carbonate as raw materials. The main domestic production enterprises include Jiangxi Ganfeng Lithium Industry Group Co., Ltd., Tianqi Lithium Industry Co., Ltd., and Shengxin Lithium Energy Co., Ltd.

In 2023, the basic lithium salt production capacity and output in China are shown in Table 3.

In 2023, the efficiency of the basic lithium salt industry has significantly declined. According to the performance forecasts disclosed by listed companies, the company's profit has significantly decreased, with Tianqi Lithium Industry's profit of about 10 billion yuan. Some companies may experience losses during the downward cycle of lithium salt prices due to the fact that it takes one or two months for lithium concentrate to be transported from abroad to factories due to external purchases. The lithium extraction process of spodumene in China is moving towards intelligence, and the production of lithium hydroxide and salt lake lithium extraction technology from spodumene are also widely used in overseas projects. The automation level of the production line is further improved, and the product quality is constantly improving. Most of them can now be directly used for the production of positive electrode materials for lithium batteries. The quality of products such as battery grade lithium carbonate and battery grade lithium hydroxide is internationally leading.

According to preliminary statistics from the Lithium Industry Branch of the China Nonferrous Metals Industry Association, the total production of positive electrode materials for lithium-ion batteries in China was about 2.4 million tons in 2023, a year-on-year increase of about 20%, as shown in Table 4.

The rapid development of new energy vehicles has driven the rapid development of power lithium batteries, as well as the rapid development of domestic lithium battery cathode materials and the main battery electrolyte lithium hexafluorophosphate industry. The production capacity of major domestic production enterprises has rapidly expanded. By the end of 2023, the production capacity of four types of cathode materials in China exceeded 5.5 million tons, and there are five cathode material enterprises with a production capacity exceeding 300000 tons. Domestic enterprises have a production capacity of lithium hexafluorophosphate of over 300000 tons, and the production capacity of lithium difluorosulfonate has also exceeded 10000 tons. The production capacity of the main electrolyte material lithium hexafluorophosphate is about 159000 tons.

（2） Industrial structure

Since the 1950s, China has been constructing lithium salt plants. Through decades of continuous efforts, a complete lithium "full life cycle" industry chain has been established, including lithium resource development, basic lithium salts, lithium compounds, metallic lithium and its alloys, lithium battery cathode materials, lithium batteries, lithium batteries, and waste recycling. At the same time, a complete industrial system has been established, including exploration, design, scientific research, equipment manufacturing, and environmental protection, which are fully equipped with the lithium industry.

China has established a complete lithium product supply system, which can produce various lithium compounds such as lithium carbonate, lithium hydroxide, lithium chloride, lithium cobalt oxide, lithium nickel cobalt manganese oxide, lithium nickel cobalt aluminum oxide, lithium iron phosphate, lithium manganese oxide, lithium manganese iron phosphate, lithium dihydrogen phosphate, lithium fluoride, lithium hexafluorophosphate, lithium difluorosulfonymide, lithium borate, lithium oxalate, etc. It can also produce metallic lithium and various lithium alloys, and is also developing and producing various new lithium products. Compounds such as lithium carbonate and lithium hydroxide are classified into battery grade, industrial grade, or pharmaceutical grade according to their application fields, and are also classified into different grades based on their chemical composition. Lithium hydroxide can be divided into monohydrate lithium hydroxide and anhydrous lithium hydroxide. Monohydrate lithium hydroxide can also be classified into micro powder type and crystalline type according to its morphology.

Several cities in China have established lithium battery industry parks with well-designed industrial chain layouts, which have formed a good agglomeration effect in the lithium battery industry. The park will promote the integration and development of upstream and downstream enterprises, forming an industrial ecosystem driven by leading enterprises, supported by major projects, and developed through collaborative agglomeration of upstream and downstream enterprises. Significant contributions have been made to improving industrial level, enhancing product quality and technological level, and promoting sustainable development. Multiple regions have built and developed lithium battery industry parks with advantages in resources, energy, technology, capital, and industrial chain, such as Yichun Lithium Battery Industry Park in Jiangxi, Suining Lithium Battery Industry Park in Sichuan, Jintan Lithium Battery Industry Park in Changzhou, Jiangsu, Yibin Lithium Battery Industry Park in Sichuan, and Ningxiang Lithium Battery Industry Park in Changsha, Hunan.

The basic lithium salt industry in China, such as lithium carbonate and lithium hydroxide, is mainly distributed in Jiangxi, Sichuan, Qinghai, Jiangsu, Shandong, Hebei, Hubei and other places. Metal lithium and its alloy production enterprises are mainly distributed in Jiangxi, Sichuan, Xinjiang, Qinghai, Jiangsu, Chongqing, Tianjin and other places. Lithium battery cathode material production enterprises are mainly concentrated in multiple provinces, cities and autonomous regions such as Sichuan, Yunnan, Hunan, Guangdong, Fujian, Hubei, Henan, Shandong, Guizhou, Anhui, Inner Mongolia, Hebei, and Tianjin.

The Chinese government has always been concerned about the recycling and utilization of waste lithium batteries, and has successively issued multiple policy documents. On December 15, 2023, the Ministry of Industry and Information Technology publicly solicited opinions on the "Management Measures for Comprehensive Utilization of Power Batteries for New Energy Vehicles (Draft for Comments)". The Management Measures for Comprehensive Utilization of New Energy Vehicle Power Batteries are formulated in accordance with laws and administrative regulations such as the Environmental Protection Law of the People's Republic of China, the Solid Waste Pollution Prevention and Control Law of the People's Republic of China, and the Circular Economy Promotion Law of the People's Republic of China, in order to strengthen the management of comprehensive utilization of new energy vehicle power batteries, promote resource recycling, and promote high-quality development of the new energy vehicle industry.

The Ministry of Industry and Information Technology has publicly announced the list of enterprises that meet the industry standards for the comprehensive utilization of waste power batteries in new energy vehicles through the release of a "whitelist". By the end of 2023, the number of domestic power battery recycling whitelist enterprises has reached 156.

The recycling and utilization of waste lithium batteries involves the integration of various innovative technologies. Improving the recycling of waste lithium batteries, guiding the flow of waste batteries to legitimate recycling and reuse enterprises, and regulating the circulation and recycling of used power batteries are related to the sustainable development of the lithium battery industry. A relatively complete waste lithium battery recycling and reuse system has been established in China, and multiple waste battery dismantling and processing production lines have been built or under construction to recycle valuable metals such as nickel, cobalt, manganese, and lithium contained in waste batteries. The Ministry of Industry and Information Technology disclosed that in 2023, the comprehensive utilization of waste power batteries for new energy vehicles reached 225000 tons, basically achieving full collection of receivables. There is a group of domestic enterprises that can use crude lithium carbonate, lithium sulfate, or lithium containing waste to produce battery grade lithium carbonate or lithium hydroxide, which can achieve mutual conversion between lithium compounds and have the ability to produce high-quality lithium salts.

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