Chinese breakthrough makes lithium production considerably cheaper
May 21, 2019 Category China News Round-up, Weekly
The production of lithium – an essential ingredient in batteries for electric cars – has become easier and significantly cheaper, thanks to a technological breakthrough, just as U.S. concerns about China’s dominance in the supply chain are on the rise. The cost of extracting the mineral has been slashed to a “record low” of CNY15,000 per ton by the new process, compared to an international price for lithium ranging from USD12,000 to USD20,000 per ton – and a long-term contract price of about USD17,000 – over the past year. The precise production costs of lithium are a closely guarded business secret, but industry insiders interviewed by the South China Morning Post agreed that the rate quoted in a Chinese government report could be considered one of, if not the lowest, around.
While China’s lithium output is still relatively low, it dominates supply of the end product, producing nearly two-thirds of the world’s lithium-ion batteries, compared with 5% for the United States, and it also controls most of the world’s lithium processing facilities, according to Benchmark Minerals Intelligence. Republican Senator Lisa Murkowski, who introduced the Minerals Security Act alongside Democratic Senator Joe Manchin at the beginning of May, said China’s lead in the electric car supply chain sector gave it an edge in the ongoing trade dispute.
The U.S. is not the only country playing catch-up with China. France and Germany have also asked the European Commission to support a €1.7 billion battery cell consortium, aimed at reducing China’s dominance. The scientific breakthrough could change the amount of lithium China is able to produce in the future. State-owned company Qinghai Lithium Industry – which has been taking advantage of the new process – has enjoyed an average profit margin of more than 50% over the past three years, with total revenues exceeding CNY3 billion, the South China Morning Post reports.
Cheaper lithium batteries will reduce the prices of electric vehicles (EVs) as about 30% to 50% of the cost of an electric car can be attributed to the battery.
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