The cost of lithium carbonate varies by raw material and production base. Mysteel believes that the lithium carbonate prices and cost will both drop with the supply of lithium carbonate gradually outnumbering the demand, and resource projects in Africa coming on stream.
Concerning the global supply landscape of lithium resources back in 2022, Australian lithium mines contributed 41% of the total supply, followed by South American brine lakes with a share of 32%. Asian lithium mines and brine lakes took up 12% and 11% respectively, most of which are in Jiangxi Province, Qinghai Province and Tibet, China.
Zimbabwe come under the spotlight in 2023, but the supply was still relatively small compared to its peers.
The cost of lithium carbonate varies when it comes to raw materials with different production base and route.
Source: Mysteel
For South American brine lakes, the production cost was relatively low and stood at $3,330-4,700/tonne or Yuan 29,100/t (based on the USDCNY exchange rate of 7, the same below). The full cost would then amount to Yuan 33,000-43,000/t if counting in other expenses, like fabrication charges, at around Yuan 10,000/t.
The production cost based on brine lakes in Asia was also low at around Yuan 30,000-50,000/t, with the full cost staying at Yuan 50,000-70,000/t.
Producing lithium carbonate using Australian spodumene was quite economic owing to the ore's high grade, but it turned the other way round when considering the royalties, which equaled to 5% of the selling price. That is, while the production cost was just $364-1,033/t, the full cost surged to Yuan 70,000-103,000/t after taking in the royalties and fabrication charges.
Asian mines are mostly lepidolite mines located in Jiangxi Province, China, and the cost was high with a full cost of Yuan 80,000-130,000/t. As the lepidolite grade drops further, the cost is expected to boom. Nevertheless, the total supply has been restricted by the mining regulations.
Mysteel believes that the supply of lithium resources will grow further with the commissioning of lithium projects in Africa. In the case that lithium carbonate is already challenged by oversupply in 2023, the prices and cost of lithium carbonate are likely to fall. Nevertheless, as lithium carbonate prices will find firm support at Yuan 120,000/t, salt factories with in-house lithium resources will enjoy better profits.
Written by Aggie Hu, huchenying@mysteel.com
