[SMM Analysis] Interpretation of Lithium Extraction Technology in the "Catalogue of Technologies Prohibited or Restricted from Export in China"

On January 2, the Ministry of Commerce issued a notice seeking public opinions on the adjustment of the "Catalogue of Technologies Prohibited or Restricted from Export in China." The notice stated that to strengthen the management of technology import and export, the Ministry of Commerce, in conjunction with the Ministry of Science and Technology and other departments, plans to adjust the "Catalogue of Technologies Prohibited or Restricted from Export in China" in accordance with the relevant provisions of the "Foreign Trade Law of the People's Republic of China" and the "Regulations of the People's Republic of China on the Administration of Technology Import and Export." The proposed adjustments include adding restrictions on the export of technologies related to the preparation of lithium battery cathode materials and lithium extraction. The restrictions on lithium extraction technology exports mainly include the following points:

Non-ferrous metal metallurgy technology: New control points are added under the non-ferrous metal metallurgy technology (Code: 083201X), covering the complete industry chain from lithium extraction from spodumene to lithium metal preparation, such as "lithium extraction from spodumene to produce lithium carbonate technology," "lithium extraction from spodumene to produce lithium hydroxide technology," and "lithium metal (alloy) and lithium material preparation technology."

1. Lithium extraction from spodumene to produce lithium carbonate technology: Includes lithium extraction from spodumene to produce lithium carbonate technology.

2. Lithium extraction from spodumene to produce lithium hydroxide technology: Based on technologies such as lithium hydroxide preparation from purified lithium solution, sodium removal by freezing, evaporation crystallization, continuous production automatic control, and crushing and drying.

3. Lithium metal (alloy) and lithium material preparation technology: Includes multi-anode electrolysis technology, lithium metal distillation purification technology, and lithium metal (alloy) and lithium material rolling processing technology.

4. Direct lithium extraction from raw brine technology: Includes technologies such as adsorbent material synthesis (aluminum-based, titanium-based, manganese-based), brine adsorption lithium extraction PID process, and integrated adsorption and membrane supporting devices.

5. Purified lithium solution preparation technology: Includes technologies such as ion exchange impurity removal, removal of B, Ca, K, Na, S from lithium-containing solutions, membrane separation, and electrodialysis impurity removal.

China is the world's largest producer of lithium carbonate and lithium hydroxide. According to the global lithium carbonate output in 2024, China accounted for over 60%. Among this, China's lithium carbonate derived from spodumene accounted for over 90% of the global output, and China's lithium hydroxide derived from spodumene also accounted for over 90% of the global output, demonstrating that China's lithium extraction technology from spodumene is at the forefront globally. Additionally, China is also a major producer of lithium metal. On the salt lake side, Qinghai primarily uses adsorption methods, and its R&D in DLE-related technologies is also at the global forefront. The release of this policy aims to achieve:

1. Protecting Core Technologies and Industry Security

• Preventing Technology Leakage : Lithium extraction technology is one of the key core technologies in the lithium industry. Restricting its export can effectively prevent related technologies from being acquired by foreign companies, avoiding the weakening of China's technological advantages in this field.

• Maintaining Industry Competitiveness : By restricting the export of lithium extraction technology, China can maintain its competitiveness in the global industry chain of the lithium sector. Currently, China dominates a significant portion of the global lithium battery industry chain, leading in performance and cost. Restricting technology exports helps sustain this advantage and prevents foreign companies from rapidly enhancing their competitiveness through technology acquisition, which could impact China's lithium industry.

2. Regulating International Technology Cooperation and Market Order

• Clarifying Technology Export Rules : The adjustment of the "Catalogue" provides clear guidance and regulations for technology exports in the lithium industry, enabling enterprises to follow established rules when engaging in international technology cooperation and avoiding legal risks and trade disputes caused by improper technology exports. Enterprises must apply for technology export licenses from provincial-level commerce authorities in accordance with relevant laws, regulations, and policy requirements, and can only proceed with foreign investments or technology cooperation after obtaining approval.

• Preventing Disorderly Competition : Restricting the export of lithium extraction technology helps prevent disorderly competition in the overseas layout of related industries. In the international market, some enterprises may transfer technology at low prices to compete for market share, leading to undervaluation of technology and potentially triggering malicious competition, harming the interests of the entire industry. Through approval management, technology exports can be reasonably regulated to avoid such situations and maintain a healthy competitive order in the international market.

Points to Note Regarding This Policy: Firstly, this policy only restricts technology exports, not the products themselves. Secondly, the approach to technology export is "restrictive" rather than "prohibitive." If specific restrictions on technology exports are determined in the future, enterprises can follow the approval process below:

(1) Application for License: For technologies subject to export restrictions, an application must be submitted to the competent department of foreign trade under the State Council. Upon receiving the application, the competent department of foreign trade under the State Council, in conjunction with the competent department of science and technology under the State Council, will review the application and decide whether to approve or disapprove it within 30 working days. For restricted technologies requiring confidentiality review, the relevant national regulations will apply.

(2) Letter of Intent for License: If the application for technology export is approved, the competent department of foreign trade under the State Council will issue a letter of intent for technology export license. The applicant can only proceed with substantive negotiations and sign a technology export contract after obtaining the letter of intent.

It should be noted that this document is currently only a draft for public consultation, with the deadline for feedback being February 1, 2025. SMM will continue to monitor the latest developments.