China's leading battery maker Sunwoda invests $2.4 bil in upstream lithium projects

China's leading lithium battery maker Sunwoda Electronic said Dec. 8 it will invest at least Yuan 16.5 billion ($2.4 billion) to build a 50,000 mt/year lithium carbonate project in the Yichun city of Jiangxi province, a move that would help it secure upstream resource supply and lower its production costs.

The project will also involve building a 50 GWh recycling and a 300,000 mt/year cathode material project, according to the company.

Chinese companies are racing for securing lithium supplies to meet the booming electric vehicle demand in the country, a development China deems an integral part of its plans to make energy transition successful.

Sunwoda said it will set up a joint venture with municipal state-owned enterprise Yichun Mining to explore mines which were under Yichun Mining's control.

Yichun will also create a joint venture with Sunwoda to develop lithium salts and cathode materials projects, holding a stake 35% and 65% in the two projects, respectively.

The loading volume of Sunwoda's power battery totaled 5.5 GWh in the first 10 months of this year, accounting for 2.5% of the county's total, according to data from the China Automotive Battery Innovation Alliance.

The Yichun city is home to rich reserves of lepidolite, a raw material used to extract lithium. The city has been grabbing market attention as tight supply and high prices of lithium salts continue to rattle lithium markets.

Yichun has lithium oxide reserves of nearly 2.58 million mt, accounting for 23.6% of the country's total, according to a report from the state-run Jiangxi Daily.

The Jiangxi province has released a series of measures to enhance its leading position of new energy industry and promote development of its lithium industrial chain.

The province promised to lend strong support to important projects including cathode, next-generation anode materials and power battery projects from land, energy, electricity and gas use.

Expanding lithium production

China's lithium chemicals production is expected to expand in 2023, which could ease the tight supply situation this year to some extent and weigh on domestic prices, some sources said.

Driven by soaring lithium chemical prices and a strong demand, Chinese lithium converters have been widening production or adding new projects from 2021.

China's second-largest lithium chemical producer, Tianqi Lithium, said Dec. 7 that the first phase of its lithium hydroxide project in Australia's Kwinana with a capacity of 24,000 mt/year has achieved the ability of commercial production from Nov. 30.

Lithium chemical producers are involved in converting raw material containing lithium form into lithium carbonate or hydroxide, which are much more refined versions that are used to build batteries for electric cars.

China's lithium carbonate prices are expected to get some support before China's New Year holidays in late January as maintenance and cold weather will lower production to some extent, according to sources.

Lithium prices have trended downwards over the past two weeks because consumers have almost finished stocking and previous high prices also hampered buying activities.

Platts assessed battery-grade lithium carbonate at Yuan 563,000/mt Dec. 7 on a delivered, duty-paid China basis, down Yuan 12,000/mt from a week earlier.