China’s CATL, the world’s biggest maker of EV batteries, is considering whether to mothball a key lepidolite mine in the south-eastern Jiangxi province, as well as one of its three lithium carbonate production lines, according to a research report published on Wednesday by Citi.

Falling lithium prices have affected the cost-benefit equation of producing lithium worldwide, particularly at CATL’s large mine in the Jiangxi province. The asset holds vast amounts of lepidolite, a hard rock ore that is relatively expensive for producing lithium.

The move will reduce China’s monthly lithium carbonate output by 8% and “will help rebalance the supply with demand,” UBS analysts led by Sky Han wrote in a note on Wednesday.

Analysts estimate it costs between 80,000 yuan ($11,230) and 120,000 yuan ($16,860) to produce one tonne of lithium carbonate equivalent (LCE) from lepidolite in China, while extracting the same amount from brine deposits or spodumene costs between 40,000 yuan and 60,000 yuan.

Despite the cost disadvantage, lepidolite mines in Jiangxi are more accessible than the brine lakes on China’s western plateaus and the spodumene rock in southwestern Sichuan province.

Rystad Energy consultancy sharply reduced in March its forecast for China’s lithium mining output growth this year, down to 12% from an earlier projection of 54%. This downward revision was primarily attributed to the slowdown in lepidolite mining.

Globally, Rystad anticipates 27% growth in mined lithium output, down from its previous estimate of 42%.

Nearly half of China’s lithium production last year came from lepidolite, according pricing agency Fastmarkets. The use of the lithium-bearing ore has surged in recent years, with output more than doubling to 114,500 tonnes of LCE over the past two years.

(With files from Reuters)

Source: MINING.COM – Read More