With lithium carbonate price hovering low through 2024, China saw the phase-out of some lithium carbonate capacity challenged by high cost. However, it is likely that the lithium carbonate capacity will keep expanding in 2025 primarily because the demand end is yet to peak driven by the carbon reduction goal, Mysteel's analysis shows.
Mysteel counted approximately 1.61 million tonnes/year lithium carbonate capacity by end-2024, consisting of 50.2% spodumene capacity, 26.5% lepidolite capacity, 11.9% brine capacity, and 11.3% recycling capacity.
It is estimated that new lithium carbonate capacity will keep coming on stream in 2025, most of which will be contributed by the spodumene and recycling end. Specially, some lithium converters in Sichuan Province have plans to upgrade their production lines to flexible ones. That is, these lines can be adapted to different raw materials when needed.
From a region-wise perspective, Jiangxi Province is an absolute leader in lithium carbonate capacity in China, which takes up 44.1% of China's total capacity by 2024, followed by Sichuan Province and Qinghai Province thanks to the rich lithium resource endowment in these regions.
Jiangxi Province accommodates 44.1% of China's total lithium carbonate capacity by 2024 where lepidolite resources are abundant. However, only a few local converters are scheduled to bring online spodumene capacity in 2025 as the local lepidolite capacity has struggled to break even in 2024 when lithium prices fall.
The lithium carbonate capacity in Sichuan Province takes up 12.3% of China's total by 2024 for several advantages including natural resource endowment, low energy cost like cheap hydropower and natural gas, and relatively friendly environmental protection requirements. And new capacity can be expected in 2025.
As the production process with the lowest cost and low carbon emission, the brine projects in Qinghai Province contribute 11.6% of China's carbonate capacity by 2024. And a 40,000-tonne carbonate project is likely to be put into operation in 2025.
Apart from the above-mentioned regions, the capacity expansion in Xinjiang Province in 2025 is also worth attention.
When reviewing China's carbonate capacity, Mysteel has also done a detailed analysis of the production cost. It is a wide recognition among the players that brine projects enjoy the lowest cost of around Yuan 30,000-50,000/tonne on average (cash cost, excluding depreciation and cost of equity), according to Mysteel's cost model. Lepidolite production process is the most expensive due to low grade of the raw material, and some capacities have already been phased out in 2024 for profits lingering in the negative.
In 2025, it is expected that the industrial average production cost will drop further with the addition of some brine projects and elimination of capacities with high cost.
Source: Mysteel
In this case, there is high possibility that the lithium carbonate price will stay on the downtrend in 2025 amid the persistent oversupply and a potential fall in the industry's average production cost.
Written by Aggie Hu, huchenying@mysteel.com
The above content is from Mysteel Lithium Carbonate Annual Report 2024, please contact inquiries@mysteel.com to get a sample!
