BYD subsidiary won the bid for 80,000 tons of lithium mining contract in Chile, which will have 20 years to produce lithium salt in the next 20 years.

SMM, January 13: BYD and Servicios y Operaciones Mineras del Norte each won 80, 000 tons of lithium in the 400000 tons of lithium tender launched by the Chilean Ministry of Mines in October. Of which BYD offered $61 million and, Servicios y Operaciones offered $60 million, the two contracts together account for about 1.8 per cent of Chile's known lithium reserves.

It is reported that SQM and Cosayach Caliche SA, one of the world's largest lithium giants, participated in the bid and made an offer, but the authorities said their offer was far lower than the winning price, so they failed to win the bid.

According to the previous provisions of the Chilean tender, the winning bidder will be given a period of seven years of survey, research and project development, which can be extended by up to two years, followed by another 20 years to produce lithium salt. Both of the winning companies must obtain the required environmental permits before exploration and must promote dialogue with surrounding communities.

It is worth mentioning that Chile's bidding process for a total of 400000 tons of lithium ore contract has not been plain sailing. There has been a lot of opposition in Chile before. In early January, lawmakers from Chile's centre-left opposition party, PPD, applied to the court to prevent the outgoing government from accepting tenders for lithium mining contracts. They believe that what the government of the current President of Chile, Sebasti á n Piera, has done is to put the overall interests of the country at risk. Lithium is a strategic natural resource that is very important to Chile's future. The news once triggered a heated discussion in the market on the future supply of lithium resources, which almost made the already unabundant supply of lithium resources even worse.

However, the application was quickly rejected by the court on the ground that it was "too late", so the tender was made public by the Chilean Ministry of Mines as early as October 2021 and can no longer be changed. And now the public bidding results have completely settled the bidding.

According to the 2021 data of the US Geological Survey, the global lithium reserves total 21.06 million tons of lithium metal equivalent, equivalent to about 105.28 million tons of LCE. Among them, the top five countries in the world in lithium resources are Chile, Australia, Argentina, China and the United States, accounting for 86% of the total. Among them, Chile accounts for 44%, and is rich in lithium resources.

In the context of today's "double carbon", the development of new energy vehicles around the world is driving into the fast lane, and the demand for lithium resources is also rising. According to SMM estimates, the global lithium resources will show a shortfall of about 9% in 2012-2021, and the raw materials on the demand side will not be sufficient for pre-inventory consumption. In this context, the price of lithium is naturally rising.

In 2021 alone, according to the historical price of SMM, the spot price of lithium metal rose by 175%, while the average price of battery-grade lithium carbonate, one of the raw materials of power batteries, rose by more than 418%.

"Click to view the historical price of SMM

This situation has not been alleviated until now. In 2022, the price of lithium carbonate has risen more than every day, and now it has successfully risen to 316000 yuan / ton, sprinting to the 350000 yuan / ton barrier.

"Click to view the spot price of SMM metal

SMM research shows that at present, domestic battery-grade lithium carbonate smelters offer sporadic quotations, and in the middle of this week, under the influence of the sharp drop in lithium prices in Wuxi, some traders began to release goods, but due to the limited inventory and the high degree of shortage downstream, spot prices remain high. "View details

Galaxy Securities previously predicted that the increase in the effective supply of global lithium resources will still be small in 2022. Driven by the substantial release of new production capacity of new energy vehicles and cathode materials, the shortage pattern of lithium resources will continue. It is expected that the supply gap in the lithium industry will expand to 47000 tons in 2022. LCE, lithium prices are expected to remain high, accompanied by intermittent supply disturbances and seasonal expansion of consumption. There is the possibility of further explosive surge.