Global lithium resource supply is still tight

On a global scale, most of the globallithium resource supply comes from salt lakes and hard rock lithium mines, withmature salt lakes mainly located in the South American Lithium Triangle andChina, and most lithium mines still concentrated in Western Australia.

It is understood that several new lithiummines located in Western Australia have come on stream in the past three yearsand a number of existing projects have announced or executed expansion plans.It is expected that from 2022 to 2023, Australian lithium pyroxene supply willremain one of the major increments in global lithium resource supply, andcurrently announced lithium pyroxene capacity expansion plans or new capacityplans include Greenbush, Mt Marion, Pilgangoora, Ngungaju, Wodgina, Finniss andothers.

However, influenced by factors such aslabor shortage and declining mine grade due to the ongoing New Crown epidemic,the construction and commissioning of lithium pyroxene projects in Australiamay face various uncertainties in the near future. Meanwhile, due to the longlithium resource development cycle, the capacity of other kinds of lithiumresource projects cannot be released in the short term. The supply of lithiumpyroxene concentrate is expected to remain relatively tight in 2022.

According to the U.S. Geological Survey(USGS) 2022 report, the world's highest quality lithium saline is located inChile, Argentina and Bolivia, known as the South American lithium triangle,accounting for 56% of global lithium reserves. 2021 to 2022, the main supplyincrement of lithium brine projects in Chile, Argentina and China.

South American saline lakes have favorabledevelopment conditions due to their low magnesium-lithium ratio, and the mainSouth American saline lakes that can form stable lithium salt output areAtacama Salt Lake, Olaroz Salt Lake and Hombre Muerto Salt Lake. The projectsare under construction. It is expected that the growth rate of lithium supplyfrom salt lakes will increase significantly after 2023, but the effectivesupply will be limited in the short term.

Compared with lithium pyroxene lithiumextraction, lithium mica lithium extraction has certain advantages in terms ofresource self-sufficiency and transportation cost. Previously, due to thecomplex composition of lithium mica, extraction process impurities, continuousproduction and other factors, mica lithium extraction in the past for a longtime was not favored.

In recent years, the domestic lithium micalithium extraction technology has been making breakthroughs, and the productioncapacity has been gradually released, and with the advantage of its ownresources, the lithium mica lithium extraction capacity has been increasing inrecent years, but the lithium mica lithium extraction capacity constructionalso faces challenges from the low grade of lithium ore, the large amount ofwaste slag formed by smelting, and the difficulty of comprehensive utilizationof other rare and precious resources contained in lithium ore. According to theforecast of Anxin Securities, the global lithium mica lithium productioncapacity is expected to reach 85,600 tons of lithium carbonate equivalent in2022.

It is worth mentioning that, in response tothe soaring prices of raw materials, Ningde Times chief scientist Wu Kairecently said that it is necessary to accelerate the development andutilization of domestic lithium resources and substantially improve the abilityof upstream mineral resources to maintain supply and stabilize prices. At thesame time to promote the improvement of the battery recycling system, so as toachieve the popularity of electrification and the healthy and orderlydevelopment of the industry.