FACTBOX: China set to raise African lithium output in 2024 with diversification plans

China is set to raise lithium ore production in Africa in 2024, with plans to diversify its supply value chain, as it continues to bolster its domestic industry and aims for higher exports of electric vehicles.

Lithium supply security has become a top priority for the global lithium-ion battery industry chain, as lithium is a key material for the manufacturing of electric vehicles playing a critical part in decarbonization efforts.

China, whose own lithium-focused resources are not large enough to run its huge industry, relies heavily on countries like Australia to secure raw material supplies. In 2023, Australia accounted for 79% of China's imports of spodumene, which is further processed into lithium chemicals, according to China-based consultancy Huachuang Securities. But as Australiaand other top global lithium producers draw up their own critical mineral plans, China has continued to explore steady supplies of lithium, including in Africa.

China has been investing a lot in the African lithium industry over the past few years, market sources said. African lithium ore production is expected to rise significantly in 2024, they said, adding that most of the increase is led by Chinese-invested projects.

Some Chinese-led projects in Africa that started in 2023 are expected to ramp up their production this year, with more new projects expected to come on stream in 2024, sources said. This would boost the supply of African lithium ore to China, making the region a key supplier, thereby helping reduce China's heavy reliance on Australian lithium sources, some said.

Infrastructure

• Lithium supply from Africa is expected to soar 253.7% year on the year in 2024 to 145,000 mt of lithium carbonate equivalent, taking up 11% of the global total supply, according to China's top producer, Ganfeng Lithium.
• African lithium mines are expected to become an important part of the global supply of lithium resources, as new projects in the region gradually come online, Ganfeng Lithium said in its March annual report.
• Zimbabwe with its largest lithium reserves in Africa has drawn investors in battery minerals from Canada, the UK and Australia in recent years, but China remains the dominant player in the continent.
• However, Africa, which has its own set of challenges related to infrastructure, political and macroeconomic risks, has faced high energy costs hampering its mining development in the past.
• China's lithium carbonate and hydroxide production capacity totaled 1.1 million mt/year and 700,000 mt/year in 2023, up 83% and 94%, respectively, from 2022, according to the China Nonferrous Metals Industry Association (CNIA).
• China's output of lithium chemicals accounted for 47% of the total production capacity in 2023, according to the CNIA. However, the output is expected to increase going forward as production from new projects ramps up, industry sources said.

Trade flows

• With China's growing refining capacity for lithium chemicals, Zimbabwe has become a major raw material source, but importers still heavily rely on Australia and Brazil.
• China imported about 4.01 million mt of spodumene in 2023, up 41% on the year, according to the China Nonferrous Metals Industry Association. China's dependency on imported lithium raw materials reached about 57.5%, it said.
• Zimbabwe became the second-largest supplier to China following Australia, with spodumene shipments reaching 393,000 mt in 2023, soaring 569.9% from a year earlier, according to Huachuang Securities.
• Zimbabwe now accounts for 9% of China's spodumene import market share, according to Huachuang Securities.
• China's lithium carbonate imports and exports totaled 158,749 mt and 9,593 mt, respectively, in 2023, leading to net imports of 149,156 mt, according to China's customs data.

Prices

• Platts assessed spodumene concentrate with 6% lithium oxide content at $1,160/mt FOB Australia April 8, down 73% year on year, S&P Global Commodity Insights data showed.
• Platts assessed battery-grade lithium carbonate at Yuan 95,000 ($13,136)/mt Dec. 29, 2023, on a delivered, duty-paid China basis, down 81.7% from a year earlier.
• Market participants expect downstream demand in China to pick up amid the upcoming peak season in the second quarter, and this could support Chinese lithium prices to some extent.
• However, the overall price outlook for 2024 remains less optimistic due to expectations of a supply surplus as production ramps up globally, market sources said.
• Long-term decline in lithium prices could pose some hurdles to a rapidly developing African lithium mining industry, if prices fall below the breakeven point, sources said.