Chinese EV boom to spur lithium capacity growth in 2018

China is pivotal to the EV revolution, given its place in the lithium supply chain, delegates heard at the Chengdu conference.

The Asian country is experiencing rapid development in the new energy industry thanks to the support of the 13th Five-Year Plan, which includes continued policy support in the form of central and local government subsidies. China plans to cumulatively manufacture and sell 2 million new energy vehicles by 2020, a target revised early this year from 5 million new energy vehicles set in 2015.

Despite a revision for the 2015 target, producing 2 million units by 2020 is still a great leap from the estimated production of 700,000 units in 2017, a conference delegate told Metal Bulletin. “Imagine if China cannot reach the target of 2 million units by 2020 but produced only 1.5 million units – the growth rate is still magnificent and would sustain the demand for Li-ion batteries and consumption for lithium.”

One concern discussed on the sidelines of the conference was that Chinese government subsidies for 2018 may be lower than 2017, which could put pressure on EV production. Lithium production subsidies also fell on a year-on-year basis in 2017.

But lithium consumers and producers at the conference said they are confident that EV production and sales growth rates will remain strong in the following years close to rates reported by the China Association of Automobile Manufacturers of 30% and 26% year on year respectively in 2017.

To address the under-supply situation, lithium producers in China aim to add over the course of 2018 up to 97,500 tonnes of new lithium carbonate (Li2CO3) production capacity and 71,000 tonnes of new lithium hydroxide (Li2OH) production capacity, Zhang Jiangfeng, director of the lithium branch of the China Nonferrous Industry Association, said at the conference (see table).

Tight supply of lithium carbonate (Li2CO3) in the global market over recent months has been the main cause of high lithium carbonate (Li2CO3) and lithium hydroxide (Li2OH) prices.

Battery-grade lithium carbonate min 99.5% (Li2CO3), spot prices, ex-works domestic China, have remained at strong price levels over the course of the year. They were assessed at 170,000-180,000 yuan ($25,687-27,198) per tonne* on Thursday December 7.

Similarly, battery-grade lithium hydroxide min 56.5% (Li2OH), spot prices, ex-works domestic China, were unchanged at 142,000-150,000 yuan* per tonne on last Thursday.

Will capacity ramp-ups meet expectations?
Producing lithium is a complex process, leading to delays reaching nameplate targets on time at some lithium projects.

For this reason, some lithium consumers and producers at the conference expressed doubts that this new production capacity will be able to come online within 2018 since it may take longer than expected to get production approval from the environmental protection bureau in China. Other causes of potential delays are difficulties in securing feedstock, such as lithium spodumene (Li2O), from overseas.

“Adding 97,500 tonnes of new lithium carbonate (Li2CO3) production capacity and 71,000 tonnes of new lithium hydroxide (Li2OH) production capacity in China during 2018 sounds quite difficult and unrealistic given the difficulties of ramping up production within the lithium industry… these producers would have to secure feedstock, such as lithium spodumene (Li2O), from Australia and the rest of the world and that could be problematic,” a lithium producer told Industrial Minerals.

“We are talking about adding 168,500 tpy of lithium carbonate [97,500 tpy] and hydroxide [71,000 tpy] over the course of 2018 just in China.. world total production of lithium products is today just above 200,000 tpy, so it would be quite hard to add almost the same volume of material within a year,” a lithium consumer said.

“We believe it is quite an ambitious target given the situation of the lithium industry because of all the issues around ramping up lithium production, especially due to the problems in securing raw material… We would be surprised if these targets are met, but definitely displays the mood of the lithium industry,” the lithium consumer added.

Whether or not these targets will be achieved, these Chinese companies’ targets are a sign of the strong sentiment of the Chinese lithium industry and the need for more material.

*All lithium carbonate and hydroxide prices are available in Industrial Minerals’ Battery Price Report.

by
Industrial Minerals’ Martim Facada and Metal Bulletin’s Karen Shi