Magnis Energy Yin Shan: it will take 7 years for Australia to develop a new lithium mine. The shortage of lithium ore in the next 3-5 years is the norm.

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Data released by SMM in recent days show that towards the end of the year, the demand for funds back upstream is high, the mood of stock preparation downstream is heavy, and the price of lithium carbonate is rising rapidly. The price of battery-grade lithium carbonate rose to 24-280000 yuan / ton.

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Behind the rising price of lithium salt is the shortage of lithium mineral resources. According to public data, global lithium reserves are mainly concentrated in Chile, Australia and Argentina. Chile and Argentina have proven lithium reserves accounting for 60% of the world's proven lithium reserves, and Australia accounts for 51% of the world's total lithium raw material supply.

Battery Network learned from the Lithium Branch of China Nonferrous Metals Industry Association that in 2020, China used its own lithium resources to process about 120000 tons of basic lithium salt, and the rest of the lithium concentrate was heavily dependent on imports, importing a total of 1.47 million tons of spodumene concentrate, mainly from Australia.

According to customs statistics, from January to October 2021, China imported 1.73 million tons of lithium concentrate, imported 69700 tons of lithium carbonate, exported 6800 tons, net imported 62900 tons, imported 3100 tons of lithium hydroxide, exported 60000 tons, and net exported 56900 tons. From January to October 2021, the import of lithium concentrate, the net import of lithium carbonate and the net export of lithium hydroxide have all exceeded the whole year of 2020.

Yin Shan, a consultant to Magnis Energy Technology, said that at present, the main lithium ore resources come from spodumene ore in Australia and salt lake lithium mine in Argentina.

"at present, 13 salt lake lithium mines in Argentina have proven reserves, and 4 salt lake lithium mines have started production." According to Yin Shan, "however, in order to protect the environment, the Argentine government strictly controls the extraction of underground fresh water. No matter how large your reserves are, you can only build a lithium carbonate plant of 20,000 to 40,000 tons per year."

With regard to Australia's spodumene mine, Yin Shan said that a total of 11 lithium mines have been proven in Australia, seven of which have been mined, and four are under construction, with an annual output of less than 3 million tons of lithium concentrate, excluding underwriting contracts from companies in the United States, Japan and South Korea. about 2.2 million tons of lithium concentrate can be shipped to China, all of which have long-term underwriting customers.

"the eighth lithium mine in Australia to enter the mining stage is the CORE lithium mine, which is expected to start production in the fourth quarter of next year, with an annual output of 175000 tons of lithium concentrate. Ya Hua Group obtained its underwriting agreement of 75000 tons per year as early as 2018. At the beginning of this year, Ganfeng Lithium invested in CORE Lithium Mine and obtained an underwriting agreement of 75000 tons per year. In other words, the output of CORE Lithium Mine has been underwritten." Yin Shan said, "any newly mined lithium mine has already signed an underwriting agreement with the buyer." If we want to get the right to underwrite, we must invest in shares in the initial stage of exploration and sign a long-term underwriting agreement. "

Yin Shan said that from applying to the government for a green field, primary exploration, environmental assessment, detailed exploration to obtain reserves, to making an investment feasibility study report, which usually takes more than a year to produce, applying for a mining license, to building a concentrator, Australia takes about seven years to develop a new lithium mine, while China takes only two to three years to expand a lithium carbonate plant. The development speed of the demand side of lithium salt is much faster than that of lithium ore suppliers, and it is normal that the supply falls short of demand in the next 3-5 years. "companies that make cathode materials and batteries in the lithium battery industry chain must have their own lithium resource supply chain, otherwise they are working for others for free and may lose money." Yin Shan stressed.

In terms of price, the current 6% content of spodumene is $2460 per ton, and the production cost of each lithium mine varies from $190 to $500 per tonne. Yin Shan estimates that the sales price next year may reach $2600 per ton FOB.