How to Understand the Formation of Lithium Hydroxide Standard apart from Supply and Demand?

SHANGHAI, May 27 (SMM) - In 2018, the global pioneer of new energy vehicles - Tesla - officially opened the prelude to the application of high-nickel NMC materials in power batteries, and the market set off a boom in the development of lithium hydroxide, which to this day still attracts the attention of the industry due to its high prices. With the advent of the high nickel era, the market has also given rise to the need for standardisation and refinement of lithium hydroxide.

In order to keep up with the times, a meeting concering the standardisation of "Battery Grade Lithium Hydroxide Monohydrate" was held in Kunming, Yunnan Province, organised by the National Technical Committee for Standardization of Non-ferrous Metals from March 14 to 16, 2018, at which a standard preparation group consisting of a number of battery grade lithium hydroxide monohydrate manufacturers, including Tianqi Lithium and Ganfeng Lithium, was established. After a number of meetings to discuss and revise the standard, the new national standard (GB/T 26008-2020) was finally finalised and released on June 2, 2020, and has been officially implemented since April 1, 2021.

In addition, the preparation note of the new national standard points out that the 2020 version of the standard has been prepared on the basis of the production technology level of domestic and foreign enterprises and the quality demands of customers for battery-grade lithium hydroxide monohydrate, reflecting the technical level of most enterprises at home and abroad, which is practicable, operable, and conducive to regulating the battery-grade lithium hydroxide monohydrate market, while fully considering the opinions and suggestions of relevant enterprises, users and other parties.

In conjunction with the preparation note, SMM, after talking with industry experts, came up with the core drivers for the formation of the lithium hydroxide standard, naming batter cell performance, supplier capability, cathode material production efficiency and cost-effectiveness.

I. Battery cell performance: The vast majority of customers in the industry chain are very concerned about the chemical metrics that affect the performance of the battery cells (capacity, cycling, safety), such as magnetic foreign matter, copper and carbonate.

II. Supplier capacity: Through advanced purification processes and the securing of high-quality lithium resources, the top-tier lithium salt plants are capable of significantly reduce some impurities though they have not been found to have a significant impact on the battery cell, such as sulphate, sodium, calcium, potassium and silicon. The tightening of these metrics actually stems from the improvement in the supply levels of top-tier companies, with some manufacturers having achieved control levels better than the first grade of the new national standard. And based on the improved supplier capabilities, downstream customers are of course happy to accept lower impurities.

III. Cathode material production efficiency: Cathode active material plants are more concerned about impurities that can affect their production efficiency, such as chlorine. Chlorine ions can be adsorbed on metal surfaces, forming corrosive chlorides, which in turn can corrode equipment and introduce new impurities.

IV. Cost-effectiveness: For cost-saving reasons, the cathode active material and battery cell factories will selectively set loose or no requirements for some unimportant chemicals, such as manganese and magnesium. These impurities are more soluble in water than other metal ions, and will produce substances that pose a threat to the cycle or safety of the battery cell due to oxidation reactions caused by charging and discharging.

In summary, there are four main drivers for lithium hydroxide metrics: cathode active material plants, battery cell plants, OEMs and lithium salt plants. The metrics relating to the performance of battery cells need to be strictly controlled, followed by supplier capabilities that drive some of the metrics to become more stringent, as well as metrics affecting cathode active material production that need to be further controlled and those relating to cost-efficiency that can be relaxed.