Citic Securities: speeding up the Development of Local Lithium Resources A list of Sichuan key concept stocks

The tight supply of lithium ore has become the main challenge faced by domestic lithium smelting enterprises. under this background, more attention will be paid to the development and utilization of lithium ore resources in Sichuan Province. Enterprises with local lithium ore resources and development experience have a higher degree of resource protection and cost advantage. Lithium plate in the overall valuation of the market has a higher configuration value, recommend Shengxin Lithium Energy and Ya Hua Group.

With the aggravation of the shortage of lithium concentrate supply, the raw material guarantee of domestic lithium salt enterprises is facing challenges.

Driven by the strong production and sales of downstream new energy vehicles, the lithium industry is in short supply. After the capacity clearance process of Australian lithium mining enterprises from 2019 to 2020, the supply has been significantly tightened. Only the remaining two companies, Pilbara and Galaxy Resources, can sell lithium concentrate to the outside world, which is difficult to meet the raw material demand of domestic lithium salt producers. The price of lithium concentrate is expected to rise rapidly. Domestic lithium salt enterprises not only face the adverse impact of rising costs on profits, but also face the risk of cutting off the supply of raw materials.

More attention will be paid to the development of local lithium resources under the background of carbon neutralization.

The development and utilization of local lithium resources not only helps enterprises to improve the degree of raw material protection, but also avoids the price risk of lithium ore raw materials. At the same time, in the context of the global pursuit of carbon neutrality, the development of local lithium resources will help to reduce the transportation distance of lithium ore and promote the internal emission reduction of the electric vehicle industry, which is expected to be valued by the government and industry in the future. China is rich in lithium reserves, and its proven reserves rank fourth in the world, but the degree of development and utilization is low. With the rebound of lithium prices, the global lithium industry has entered a new round of capital expenditure cycle, and the development of local lithium resources is expected to accelerate, of which lithium resources in Sichuan Province is the focus of development.

The progress of exploration and construction of lithium mineral resources in Sichuan Province is expected to accelerate.

Sichuan Province has two major lithium ore accumulation areas: the Aba Keeryin Orefield and the Ganzi Methylka Orefield. Due to the low degree of exploration, Sichuan lithium mine project reserves are small, but the grade is not inferior to Australia mine, and the production cost is expected to be as low as US $300 / ton, which has a significant cost advantage. At present, the lithium mines that have entered the production state in Sichuan include the methyl card and Yelonggou lithium mine, the Lijiagou lithium mine under construction, and the pending development projects are Zola, Dangba and Delaolongba lithium mine. In addition, a new No. 3 vein with higher reserves and higher grade was discovered in 2013, confirming the huge prospects for lithium exploration and development in Sichuan Province.

The distribution of resources will become the core logic of the continuous trading of the lithium plate.

Since the second half of 2020, lithium carbonate prices have rebounded by more than 60% at the bottom, and concerns about the supply of lithium mines have intensified along with the logic of rising lithium prices in the market. Lithium mine in Sichuan Province has great resource potential and is expected to provide raw material guarantee and cost advantage for domestic lithium salt enterprises. In the context of the rising price of purchased lithium concentrate, domestic enterprises with local lithium resources projects and development and construction experience will continue to benefit and continue to have allocation value in the market with high overall valuation of the lithium plate.

Risk factors:

The risk of lithium price fluctuation, the risk of higher-than-expected growth of imported lithium raw materials, and the risk that the progress of domestic lithium mine development is not as expected.

Investment strategy:

The price of lithium salt in China has risen faster than expected, and the tight supply of lithium ore has become the main challenge faced by domestic lithium smelting enterprises. under this background, attention will be paid to the development and utilization of lithium ore resources in Sichuan Province. Enterprises with local lithium ore resources and development experience have higher resource security and cost advantages, as well as first-mover advantages in resource acquisition, construction and development of new mines, which is helpful for enterprises to build an integrated industrial layout. enjoy the long-term prosperity of the lithium industry. Recommend Shengxin Lithium Energy and Ya Hua Group, suggest to pay attention to * ST Rongjie.