China's Lithium Ore Will Reshape the Global Lithium Resource Landscape

China has made a series of significant breakthroughs in lithium ore exploration, increasing its share of global lithium resources from 6% to 16.5%, rising from sixth to second in the world, thereby reshaping the global lithium resource landscape.

As of the end of 2023, China's lithium resources amount to approximately 6.8 million metric tons, ranking sixth globally, behind Bolivia, Argentina, the United States, Chile, and Australia. Lithium resources are widely distributed and concentrated, with the three South American countries and the United States accounting for two-thirds of global lithium resources.

Specifically, China's lithium resources are diverse and widely distributed. The main types of resources include spodumene in Sichuan, lithium mica in Jiangxi, and salt lake lithium in Qinghai. Although China is not lacking in lithium resources, the development cost is relatively high due to poor resource endowment, leading to slower development progress in recent years.

More importantly, China is the world’s largest producer and consumer of lithium batteries, covering the entire supply chain from lithium ore mining, lithium salt production, battery material manufacturing, battery production to battery recycling, with processing and end-product manufacturing capacity at the global forefront. According to Zeng Yuke, an analyst at Minmetals Futures, more than 60% of global new energy vehicle sales and over 70% of lithium battery shipments come from China. China's global capacity share in cathode materials is 90%, while the capacity share in anode materials is 86%, and the global revenue share of battery manufacturing equipment companies is 79%.

However, due to the lack of high-quality, easily extractable lithium resources, China’s lithium resource position is severely mismatched with its status as a lithium battery powerhouse. The country relies on supply from South America, Australia, and Africa for primary lithium. Data shows that in 2023, China’s dependence on external lithium resources still reached 59%.

Against this backdrop, the increase in the share of lithium ore resources is undoubtedly a positive development for improving China’s international competitiveness in the lithium industry. Abundant lithium resources can reduce dependence on imported lithium ores, ensure a stable domestic lithium supply for the new energy industry, and mitigate risks arising from external supply disruptions or price fluctuations. In the context of the global green energy transition, the domestic development and utilization of lithium ore resources will help break the global concentration of resource supply in a few countries, enhancing China’s influence and voice in the international energy landscape.

By strengthening domestic resource development and technological innovation, China can enhance the autonomy and controllability of its industry chain, forming a complete industrial ecosystem from lithium mining to battery manufacturing and lithium battery recycling. The improvement of this industrial chain not only enhances China's competitiveness but also optimizes production processes, reduces production costs, and improves market competitiveness. As lithium reserves increase, China is likely to promote more strategic partnerships, expanding its influence in the international market. By strengthening cooperation with other lithium-rich countries, China can further enhance the efficiency of resource development and utilization, thereby stabilizing the global lithium supply system. At the same time, promoting the recycling of lithium batteries and technological innovations in resource reuse will improve the comprehensive utilization of resources and reduce reliance on new mineral resources.

While the expansion of lithium resources will help further consolidate China’s position as a major player in the global lithium market, in the short term, it is unlikely to have a significant impact on the supply-demand balance and price of lithium carbonate. Lithium resource development costs are affected by factors such as region, ore type and grade, and regional policies, with ore type and grade having the greatest impact on costs. From the perspective of resource development, cost is the most crucial factor for enterprises. In terms of resource layout, the Songpan-Ganzi orogenic belt and its western extension, located on the northeastern edge of the Qinghai-Tibet Plateau, are situated at higher altitudes, making mining more challenging and requiring more time for development. While lithium extraction from salt lakes has the lowest cost, China’s salt lake lithium resources have the characteristics of low lithium ion concentration and high magnesium-to-lithium ratios, resulting in lower lithium content. However, with advancements in salt lake lithium extraction technology, it is expected to become the most important source of supply for China.

The development of lithium mineral resources is a complex and systematic process, requiring comprehensive consideration of the economic feasibility of mine development. From geological exploration to the actual utilization of minerals, the process takes a significant amount of time. Referring to Australian mining development, the average time from obtaining mining rights through feasibility analysis, mine design, approval, construction, and production is typically 6 to 8 years. Therefore, the results of geological exploration will take a long time to materialize into lithium products, and the impact on lithium prices in the medium and short term is quite limited.