Lithium carbonate market forecast for 2024

Vertically integrated lithium sources have an absolute cost advantage and are less subject to cost fluctuations. Brine-extracted lithium costs the least, followed by spodumene, then lepidolite. With more and more lithium mining projects going into operation, the supply of lithium ore increases, affecting profitability. The cost of outsourcing spodumene and lepidolite declines consequentially, but non-vertically integrated companies still bear much higher production costs than vertically integrated ones. 

According to InfoLink’s Global Lithium-Ion Battery Supply Chain Database, global lithium carbonate demand will reach 1,189,000 MT lithium carbonate equivalent (LCE) in 2024, comprising 759,000 MT LCE from automotive lithium-ion battery, 119,000 MT LCE from energy-storage lithium-ion battery, and 311,000 MT LCE from lithium-ion battery for consumer electronics, ceramics, and glass-ceramics. The total production output of lithium carbonate is estimated to reach 1,323,000 MT LCE in 2024, with 418,000 MT LCE from brines, 688,000 MT LCE from spodumene, and 217,000 MT LCE from lepidolite. 

The majority of brines are found in South American countries, such as Chile and Argentina, as well as Qinghai in China. Producing lithium carbonate from brines is the cheapest technology for obtaining lithium carbonate, costing RMB 30,000/MT maximum. 

Spodumene assets are located mostly in Australia, with a little in Sichuan and other Chinese regions. Africa has emerged this year as another home to rich spodumene resources. Currently, spodumene remains a main source of lithium carbonate. The production cost of a vertically integrated spodumene project sits no higher than RMB 60,000/MT, while a non-vertically integrated one falls within RMB 95,000/MT.

Mainly sourced from Jiangxi, China, lepidolite is the most expensive source of lithium carbonate, thus determining the marginal cost of lithium carbonate production. Major bottlenecks of lepidolite production expansion in Jiangxi include land quota, transport infrastructure, and tailing management. Since lepidolite has a low ore grade, the local government has been hatching plans for the transportation of tailings and the storage of lithium slag, a by-product of lithium extraction. In 2023, as environmental and land issues partially abate, construction halts are less frequent than a year prior. This year, the lepidolite production volume in Jiangxi could reach 120,000 MT LCE, with vertically integrated projects contributing 75% and potentially producing lepidolite of over 200,000 MT LCE in 2024.  

In the long run, Jiangxi will see annual lepidolite production increase to 300,000-400,000 MT LCE amid production expansions. Lithium carbonate production cost of vertically integrated producers will reach RMB 50,000-70,000/MT, totting up to RMB 80,000-100,000 MT when factoring in SG&A, depreciation and finance costs. Local lithium carbonate producers in Jiangxi, such as Yongxing Special, plan to expand mining capacity from 3,000,000 MT to 9,000,000 MT and the capacity of beneficiation plants from 3,000,000 MT to 6,000,000 MT by the third quarter of 2024. Pipeline transportation will be adopted for delivery between mining sites and beneficiation plants. In the first half of 2023, Yongxing Special saw production cost (management and sales expenses included) was around RMB 76,000/MT. Gotion Yichun plans to consolidate mines from Baishuidong mine and Shuinanduan mine to a single mine  by 2025, raising production capacity from the current 3,300,000 MT to 9,000,000 MT. 
 

Despite reoccurring project delays due to environmental issues, the growth of lithium carbonate supply looks positive. Chinese producers ramp up projects in Africa, bearing out an oversupply in 2024. By then, the total production output of lithium carbonate will reach 1,323,000 MT, while demand sits at 1,189,000 MT of LCE, indicating a 10% excess supply. Against this backdrop, spot lithium carbonate prices will be pressed downward from RMB 166,500/MT on September 27, 2023 to RMB 110,000/MT in the same month of 2024.