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The Ebb and Flow of China’s Lithium Industry

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Ripples in China

Global lithium prices are experiencing a significant dip, impacting the mining industry in China. With electric vehicle (EV) demand waning, the price of lithium has tumbled, leading to production closures and job cuts on a global scale.

Lepidolite’s Plight

China, a major player in mined lithium, has been particularly affected by the decline. The uphill battle lies in mining lepidolite, a hard rock ore known for its costly lithium production process. As prices plummet, the feasibility of mining lepidolite has come under scrutiny.

The Numbers Game

According to Fastmarkets, nearly half of China’s lithium output in 2023 was derived from lepidolite. The uptick in ore volumes, coupled with the high production costs ranging from 80,000 yuan to 120,000 yuan per ton, paints a grim picture for the economic viability of lepidolite mining.

A Grim Reality

Spot lithium carbonate prices in China have dropped substantially due to soft EV demand and oversupply, unsettling the market. Although there have been spurts of price rallies post the Lunar New Year holiday, experts remain cautious about the sector’s future.

A Bumpy Ride

Despite China’s standing as the fourth-largest lithium reserves holder, the industry faces challenges. Investments in provinces like Jiangxi have been met with hurdles, especially for projects like CATL’s Jianxiawo mine and Yongxing Special Materials Technology’s Huashan mine, struggling with tight margins and production risks.

Remaining Hope

While adversity looms over the lithium sector, industry insiders like Li Liangbin from Ganfeng Lithium see a silver lining. Lepidolite, with its flexible nature in balancing supply and demand dynamics, could potentially play a pivotal role in stabilizing lithium prices amidst the turmoil.

($1 = 7.1941 Chinese yuan)

China’s mined lithium by category https://tmsnrt.rs/49WNvMU

China’s lithium carbonate prices https://tmsnrt.rs/49Fe8GI

Lithium carbonate production cost https://tmsnrt.rs/3TgK3pP

(Reporting by Siyi Liu, Andrew Hayley and Beijing Newsroom; Editing by Tony Munroe and Himani Sarkar)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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