The price of lithium carbonate has risen 10 times a year, soaring from 50,000 / ton at the beginning of 2021 to 500,000 / ton at the end of the year, so far, battery-grade lithium carbonate has remained at a high price of 480,000 yuan / ton.
Lithium prices are high, some people are happy and some people are sad.
Happy, naturally, is standing at the source of lithium materials, sitting on the big guys of the mine. Tianqi Lithium doubled its revenue and tripled its net profit in 2021, with a net profit of more than 2 billion yuan a year. Ganfeng Lithium is also crazy, with revenue exceeding 10 billion yuan in 2021 and net profit doubling 4 times!
The upstream lithium mine bosses are making a lot of money, but the middle and lower reaches of the battery manufacturers and new energy vehicle companies are pressed to the ground and rubbed. For example, the battery manufacturer Ewell Lithium Energy achieved a breakthrough of 10 billion yuan in revenue in the first quarter of 2022, but the increase in revenue did not increase profits, and the net profit fell by 19% year-on-year, and the fundamental reason was naturally the increase in raw material costs.
Downstream car companies are also not happy, the cost of a large increase in compressed profits, the Great Wall Euler sold a car on the loss of tens of thousands of yuan, in February began to decide to stop selling "black cat, white cat" two models.
At 10 times the price of lithium in 1 year, Musk called out crazy and was eager to personally go down to mine. In his April 9 tweet reply to "World of Statistics", he said: "Lithium prices are ridiculously high, Tesla may have to start large-scale personal involvement in mining and refining", and in the subsequent Tesla earnings call, he publicly called for greater investment in lithium mining, he believes that lithium is the "fundamental limiting factor" of global electric vehicle popularity.
01 | The core position of lithium
According to statistics, the battery price accounts for 30%-40% of the price of electric vehicles; and the cost of lithium batteries is mainly composed of positive electrode, negative electrode, diaphragm, electrolyte and other materials, of which the positive electrode and electrolyte account for the majority, accounting for 55% of the total cost, the core raw material of the cathode and electrolyte is lithium.
The current power lithium battery mainly has two categories: lithium iron carbonate battery and ternary battery, the main raw material of these two types of batteries is what we often call lithium salt (lithium carbonate and lithium hydroxide), lithium carbonate is mainly used to make lithium carbonate batteries, lithium hydroxide is mainly used in ternary lithium batteries.
Before being processed into lithium salts, lithium element existed in nature in two main forms: one is distributed in lithium-containing ores such as spodumene and hem mica, but in salt lake brine, underground brine and seawater.
Salt lake brine can directly extract lithium carbonate, while lithium-containing ore is first processed into lithium concentrate and then extracted into lithium carbonate or lithium hydroxide.
Therefore, the industrial chain is very simple: specifically lithium mining enterprises - lithium salt processing enterprises - cathode material enterprises - battery companies - new energy vehicle enterprises.
There is a saying in the industry that lithium has spread all over the world. Lithium, even known as "white oil", one is because lithium is the basic core material of the entire industrial chain, and the other is because this core material is relatively short.
Notice that it is shortage, not scarcity.
Musk also said that lithium is all over the earth, so why is the lithium used for power batteries insufficient?
02 | It is difficult to buy a ton of lithium
In 2021, the global proven lithium resources reached 89 million metal tons, mainly concentrated in the South American lithium triangle (Bolivia, Chile, Argentina) accounted for about 56%, And China accounted for 5.7%, ranking sixth. Among them, Australia is dominated by lithium ore, the South American lithium triangle is mainly salt lakes, and China is basically half and half.
(Source: USGS, Bohai Securities)
From the perspective of resource endowment, Australian lithium ore has advantages in terms of resource volume and grade: lithium content is large and easy to extract. At present, the world's best lithium mine (spodumene mine) is in Western Australia, the average grade is about 2%, the higher the taste of lithium ore, can extract more lithium materials; the lower the taste, means the higher the cost of refining.
The continent's resource endowments are poor. In terms of lithium ore, the Yichun region of Jiangxi has China's largest mine lithium resources (lithium mica), while the average grade of ore is only 0.3%. From the perspective of salt lake brine, most of the salt lakes in the mainland belong to salt lakes with relatively high magnesium and lithium, from which it is more difficult to extract lithium carbonate and difficult to develop: the salt lake in Qinghai has low taste, which brings challenges to lithium extraction technology and restricts the extraction efficiency; the grade of salt lakes in Tibet is much higher, but it is difficult to operate because the altitude is too high.
Therefore, although there are many lithium reserves, there are not many high-grade products that can be utilized, which is the first difficulty of lithium extraction, and it is also the primary reason for the shortage of lithium resources.
Therefore, from the perspective of supply, the world's main supply of lithium resources comes from Australia and Chile, which are more easily developed: Australia, which extracts lithium from ore, accounts for the main supply, while Chile, which is dominated by salt lake lithium, accounts for 26% of the total global production.
In fact, the production capacity of lithium salt giants such as Tianqi Lithium is indeed mainly laid out in Australia: Tianqi has two major salt lakes, two major lithium mines, and five major lithium salt plants, the largest of which the lithium salt production capacity comes from the Quinana plant in Western Australia.
Tianqi Lithium is just a microcosm. Although China's lithium resources are relatively rich, in fact, more than 70% of lithium salt production comes from overseas lithium resource supply.
At present, many countries have begun to tighten their lithium resource export policies, such as Australia tightening THE FIRB review to prevent Chinese companies from purchasing resources, and the new Chilean government discussing the nationalization of lithium resources. It is worth noting that in January this year, the Chilean court suspended the bidding project of Chinese multinational enterprises for 80,000 tons of lithium metal production in the Chilean Ministry of Mines, on the grounds that the indigenous community appealed that the bidding plan violated the principles of environmental protection and economic development.
With the window period of capital layout overseas lithium resources has passed, in the case of rapid growth in downstream electric vehicles, energy storage and other rapid demand, accelerating the development of domestic lithium resources and ensuring the supply of domestic own lithium resources to alleviate the contradiction between lithium supply and demand seems to be a clearer development path.
However, another difficulty in the development of lithium resources is the long development cycle, which is another reason for the shortage.
Taking lithium extraction from salt lakes as an example, the production cycle is generally 18-24 months, and it takes 8-10 years to add the preliminary exploration to the final production time. Therefore, lithium resources are not small, but the development is difficult and the development cycle is long, so the expansion is slow.
On the other hand, the demand for lithium is soaring:
In the context of global carbon emission reduction, it is the trend of new energy vehicles to gradually replace fuel vehicles. In 2021, the cumulative sales of new energy vehicles in the world were 6.72 million units, an increase of 115% year-on-year; China's global sales of new energy vehicles were 3.507 million units, a sharp increase, compared with the dismal 2020, an increase of 165.5% year-on-year.
Under the high prosperity of global new energy vehicles, lithium battery shipments will naturally increase, it is expected that in 2025, the global lithium battery will enter the millennium Gwh era, and the compound growth rate of global/Chinese lithium battery shipments is expected to reach 42.7%/45.1% in 2020-2025.
On the one hand, the rapid growth of lithium demand, on the other hand, the slow expansion of lithium resources has led to a fault line between supply and demand in 2021 and 2022, which is the root cause of the soaring price of lithium.
According to Rio Tinto Group's calculations, by 2030, global electric vehicle companies will need 3 million tons of lithium products per year, while the current production capacity that has been put into production and is being planned is only about 1 million tons, which is a huge supply gap. The market predicts that lithium resources will remain tight in 2022-2023, and there will be more lithium resource projects in 2024-2025, and if they can be landed according to the plan, it is expected to turn into a small surplus.
The continued tight supply and demand means that lithium prices will continue to be high. In January, Australian lithium miner Allkem Ltd expected lithium carbonate prices to rise by another 80% in the second half of fiscal 2022 compared to the first half of the year. Many people in the industry also expect that the price increase of lithium resources will continue until the end of 2023.
Head battery companies can transfer most of the increased cost of lithium resources to downstream car companies, and the second- and third-echelon battery manufacturers who do not have such a strong right to speak can be described as being attacked by the two ends of the upstream lithium mine downstream car companies, and they bear more price increase costs.
Downstream car companies have to transfer the cost directly to consumers who buy cars. In fact, since the end of last year, Tesla, Xiaopeng Motors, Ideal Automobile, etc., almost all new energy vehicle companies have announced price increases ranging from 10,000 to 30,000 yuan. But price increases will inevitably affect sales.
03 | Giants grab mines
Since the source of the problem is in lithium, if the middle and downstream manufacturers want to solve the problem from the source, they naturally have to go to the lithium mine and independently raise lithium to solve the high price of lithium carbonate.
In fact, battery manufacturers have long been laying out upstream.
For example, the power battery leader Ningde Era has laid out domestic and foreign lithium resources through measures such as investing in shares and signing long-term orders:
BYD is both a car company and an electric battery manufacturer, and in 2021, IT established Golmud BYD Lithium Battery Material Co., Ltd. to lay out mineral resources mining; the 30,000 tons /year lithium carbonate project joint venture with Qinghai Salt Lake Co., Ltd. is currently in the pilot stage of related lithium extraction technology.
Looking at Tesla, at the end of 2020, it signed a battery-grade lithium hydroxide supply contract with Ya'an Lithium, and in 2021, it signed a battery-grade lithium hydroxide product supply contract with Ganfeng Lithium. It was not enough to purchase lithium salt, and later began to buy directly: it signed lithium ore supply agreements with the Australian lithium mines Piedmont and Liontown.
In addition, in June 2020, Musk revealed that Tesla has won a 10,000-acre lithium mining right in Nevada. It's also worth noting that in early April, Zach Zens, a geologist at Rio Tinto Mining, announced that he would join Tesla. It can be seen that Tesla's industrial chain is being extended step by step online: mining - lithium extraction - self-made batteries.
In the final analysis, major battery manufacturers and car companies are going to the upstream of the industrial chain to lay out lithium resources, one is to ensure supply in the case of lithium shortage, and the other is to control costs upstream of the supply chain.
If the first half of the new energy car is a competition for production capacity carpooling skills, the second half is probably more than a comparison of who has a mine at home.
However, the layout of the upstream is a long-term thing, there is no three years and five years can not produce production capacity, it is difficult to solve the urgent need; moreover, the lithium industry has a high industry barrier:
The first is the resource barrier, although lithium resources are many, but the low-cost high-quality lithium resources that can be developed are less, and now countries have taken lithium ore as a strategic resource, and it is not as easy as before for private capital to participate;
In addition, the capital barriers for lithium salt extraction are high: in order to meet the requirements of environmental protection policies, sufficient capital strength and certain capital expenditures are required;
In addition, interlacing is like a mountain, the smelting and processing of lithium metal requires certain design and development capabilities, such as lithium hydroxide quality to a large extent affects the performance of the battery, these capabilities are not what general car companies are good at.
Car companies to grab the mine, is the expansion is also self-help, but the capital and industry barriers are another mountain in front of the mine, now electric vehicle brands are blooming, but if the lithium price continues to be high, the reshuffle of new energy car-making forces, I am afraid that it will come earlier than imagined.
What is certain is that in the end, only those enterprises that have funds, capabilities, mines, technology, and can afford to wait may really grasp the lifeblood of new energy vehicles and live better and longer.
I see it here
Still not happy to like, retweet, and follow?
Click on your best looks