China’s companies are going to any length for a hold on lithium

Automobile executives in China have had a lot to contend with this year. But those operating in the electric-car space (which is almost everyone these days) have had it especially tough. Not only has the world’s biggest EV market become even more crowded in 2021 but the explosive sales — deliveries are expected to more than double this year to around 3 million units — have led to soaring prices for raw materials. That’s also weighing on battery makers’ bottom lines and sparked heated competition globally for lithium resources.

The price of lithium carbonate has more than tripled since January, adding around $470 to the cost of making a battery-powered car, according to China Central Television. Tight supply has also been reflected in the price of other lithium materials. Companies in China that supply lithium have caught the attention of investors with shares of Tibet Summit Resources up 250% this year and Tianqi Lithium rallying 205%.

Even though China’s lithium reserves rank as the world’s fourth largest, the silvery metal is mainly found in the salt lakes around Tibet and Qinghai, a sparsely populated Chinese province spread across the high-altitude Tibetan plateau. That makes it difficult to refine and transport. While the production of lithium carbonate from Qinghai Lake has doubled this year, demand still outpaces supply, according to Dong Yang, the vice president of leading automotive think tank China EV 100. To make up the shortfall, China imports about 70% of lithium from overseas. And with the prospect of even more lithium needed as the EV revolution picks up speed, companies are stepping up efforts to secure supply for its dominant refinery sector.