China International Capital Corporation: lithium price is expected to enter the "big bull market". The technological progress of lithium extraction in Salt Lake plays the main theme of industrial innovation.

Salt lake lithium resource reserves are large, but the degree of development is low, and the resource endowment is uneven. Technological progress is the core driving force of salt lake lithium extraction industry innovation. The technology of extracting lithium from Qinghai salt lake has basically reached the leading level in China and even in the world, and is promoting the development of Qinghai salt lake industry in the direction of larger scale, better quality and higher efficiency, and is expected to spill over to Tibet and overseas. it brings an opportunity for the efficient development of local high-quality salt lake resources.

Abstract

To meet the increasing demand for millions of tons of lithium, it will be a general trend to increase the development of salt lake resources. Under the trend of global automobile electrification, we expect the global lithium demand to increase from 430000 tons in 2021 to 1.54 million tons in 2025. LCE,CAGR is 38% LCE,CAGR 2021-2025 lithium supply and demand is expected to gradually become tight. Salt lake resources have the advantages of large reserves and low cost of lithium extraction, which is of great significance to ensure the global supply of lithium resources. For China, the degree of external dependence on domestic lithium resources reached 74% in 2020, while salt lake lithium reserves accounted for 79% of domestic lithium resources. Under the background of countries around the world building a closed loop of lithium power industry, the development of salt lakes is of high strategic significance to ensure the safety of domestic lithium resources supply.

The lithium extraction technology of Qinghai Salt Lake has basically reached the leading level in China and even in the world, and technological progress will still be the core driving force for the development of Qinghai Salt Lake in the future. The reserves of lithium resources in Qinghai Salt Lake are the leading in China, but the resource endowment is not dominant. After long-term development practice, the lithium extraction process of the main salt lakes in Qinghai has been basically stable, and there is room to continue to expand production capacity. We believe that the future technological progress will still be the core driving force for the development of Qinghai Salt Lake. With the advance of technologies such as lithium extraction from raw brine and one-step preparation of lithium hydroxide, Qinghai Salt Lake is expected to further upgrade from front-end lithium extraction to back-end products.

With the spillover of lithium extraction technology in Qinghai, the salt lake in Tibet is expected to usher in an inflection point for accelerated development. The natural endowment of Tibet's salt lake is unique, but it is restricted by the natural environment and infrastructure conditions, so the development of Tibet's salt lake lags behind in the early stage. It is worth mentioning that at present, the strategic significance of the development of salt lake resources in Tibet is improving, and transportation, power, and other infrastructure facilities are gradually being improved. we believe that the superior lithium extraction technology cultivated by Qinghai's inferior resources is also expected to lift the shackles of the traditional process of salt lake development in Tibet and activate its broad potential for resource development.

Chinese enterprises "go out" with technology and are endowed with high-quality overseas resources. The "lithium triangle" salt lake in South America is rich in resources and excellent in endowment, but not all salt lakes are suitable for traditional precipitation method, and there are still a large number of potential salt lake resources that have not been fully exploited. Over the years, Chinese enterprises have iterated over the development of low-endowed salt lake resources with advanced lithium extraction technology and rich project experience in line with local conditions. we believe that lithium companies such as Ganfeng lithium industry, Mount Qomolangma in Tibet, lithium extraction technology providers, and even mining leaders in traditional fields are expected to carry lithium technology "out", further extend the resource map to overseas salt lakes and open up a broader space for development.

Risk

1) the progress and technological progress of the salt lake lithium extraction project are lower than expected; 2) the production and sales of new energy vehicles are lower than expected.