Looking back on the last round of lithium price cycle, the high lithium price reached 180000 / ton in 2016-2019.
From the perspective of main lithium resource supply, (1) the production capacity of Australia mine expanded rapidly during the period. In 2016, greenbushes was the only mature mine in production in Western Australia. In 2017, mtcatlin and MT Marion were put into operation, and the number of mature lithium concentrate mines increased to 3. In 2018, Pilbara, Altura and bald hill lithium concentrates were gradually put into operation, and the number of mature lithium concentrate mines increased to 6. In 2019, wodgina, a large lithium mine, was put into operation. However, due to the downturn of the industry, it stopped production for maintenance in November of that year. (2) Overseas salt lakes have a certain scale, and the production capacity in 2019 is 155500 tons. Mature salt lakes in production include sqm, ALB, orocobre and live, of which sqm expanded its production by 22000 tons in 2017. (3) China’s Salt Lake project started gradually in 2018. In 2018, China’s salt lakes have built a total capacity of 42000 tons of lithium carbonate, including 11000 tons of lithium carbonate produced by Lanke lithium industry.
From the perspective of capital expenditure, the industrial chain will simultaneously layout the upstream resource end and back-end smelting capacity from 2016 to 2019, and the capital expenditure at the ore end is more than that at the salt lake end. (1) The capital expenditure of the ore end is more than that of the salt lake end: from the upstream point of view, at that time, the industry was in the early stage of development, and the ore mining and beneficiation technology was mature and relatively easy to develop. However, due to certain barriers in the lithium extraction process, the amount of Salt Lake in China was gradually started in 2018, and the construction progress was slower than that of the ore. From the downstream point of view, at that time, the production process of most cathode materials and battery industry chain was also immature. Power batteries need to use spodumene battery grade lithium carbonate with less impurities as raw materials, so the ore mining priority is higher. (2) Synchronous accelerated expansion of back-end smelting capacity: according to the statistics of China Nonferrous Metals Industry Association, by the end of 2016, Chinese smelters had a total lithium salt processing capacity of 170000 tons of LCE, including 45000 tons of LCE in Salt Lake and 125000 tons of LCE in lithium extraction from ores including spodumene and mica. According to SMM, by the end of 2018 By the end of 2019, China’s lithium salt production capacity reached 281000 tons LCE / year and 572000 tons LCE / year respectively, with obvious growth rate of capacity expansion.
This round of capital expenditure focuses on the resource side and covers a variety of different resource types.
This round of capital expenditure focuses on the resource side, and the development types are mainly salt lakes and other resources. After the last round of lithium price cycle, due to the obvious inventory accumulation in all links of the industrial chain, it has entered the two-year destocking cycle from top to bottom. With the rapid growth of downstream demand in 2021, the scarcity of the mine end is prominent and its position is significantly higher than that of the smelting end. However, the global spodumene production capacity is highly concentrated. In 2021, the mineral energy produced in Australia accounted for about 88.6% of the global ore production capacity, and most of the resources with cost advantages have been developed in the last cycle, so they are not the development focus of this lithium price cycle. Compared with spodumene, the concentration of Salt Lake production capacity is scattered. At present, Cr4 accounts for more than 67% of the global Salt Lake production capacity. However, due to the progress of Salt Lake Technology and the improvement of product quality, the capital expenditure of salt lake resources in this round is significantly higher than that of other resource types. According to incomplete statistics, there are more than 35 resource side capital expenditure projects in 2021, and the investment planning is expected to exceed 67.1 billion yuan. Among them, there are 20 Salt Lake projects, with a total investment of more than 33.1 billion yuan, accounting for the leading position; There are 9 spodumene projects with a total investment of about 3.4 billion yuan. In addition, resource types including clay and mica are also expected to be completed and put into operation in this round of lithium price cycle.
Analysis of this round of lithium price cycle, why is it difficult for high lithium price to have high supply?
At present, lithium prices are strong and are still breaking record highs. Although the market is increasing capital expenditure, due to the impact of resource endowment, infrastructure and macro environment on different projects, it takes a long time to put in capacity construction. At the same time, the production line also needs a certain commissioning and climbing cycle before the capacity can be fully released, Therefore, there is still not enough supply to the market in the short term. 1) The construction period of spodumene mine is mostly 2 years, and there is a long climbing process. 2) The construction cycle of new salt lake projects is generally about 3 years (including front-end salt fields). 3) At present, raw materials and channels are limited, and large-scale supply has not been formed for recycling. 4) The capital expenditure of lithium extraction is high, and the large-scale expansion of production at the mine end may need the continuous support of booming lithium price.
Looking forward to the future, the supply curve tends to be steep, and the trend of industrial chain integration is becoming clearer.
The progress of China’s resource development is expected to accelerate: from the perspective of resource side transaction consideration, the consideration of China’s resources and high-quality lithium resources per ton is high, or it is mainly due to the relatively stable social and economic environment in China and the high certainty of project development.
Diversified types of development resources: with the maturity of the current round of Salt Lake and mica lithium extraction process, and the products are recognized by the mainstream supply chain, for example, Yongxing Special Materials Technology Co.Ltd(002756) at present, the long-term customers include Xtc New Energy Materials( Xiamen) Co.Ltd(688778) , Hunan Yuneng, Shenzhen Dynanonic Co.Ltd(300769) and other leading power battery material enterprises, and the types of resource development show a diversified trend. In addition, clay and other resources are expected to gradually become the mainstream supply.
The profit of smelting end is greatly affected by the mine end, which is conducive to the logical deduction of industrial chain integration.
Lithium resources are in short supply for a long time. In the second half of 2022, various lithium resources projects may gradually enter centralized production. Under the uncertainty of the project itself and the high demand, the supply of lithium resources may be in short supply for a long time. It is suggested to pay attention to the targets with high resource ownership rate: Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) , Sinomine Resource Group Co.Ltd(002738) , Yongxing Special Materials Technology Co.Ltd(002756) , Qinghai Salt Lake Industry Co.Ltd(000792) , Chengxin Lithium Group Co.Ltd(002240) , Tibet Mineral Development Co.Ltd(000762) , Sichuan Yahua Industrial Group Co.Ltd(002497) . In addition, Salt Lake Development dominates in this round of capital expenditure. At the same time, it is suggested to pay attention to the leading enterprise Sunresin New Materials Co.Ltd Xi’An(300487) in salt lake lithium extraction technology, materials and devices.
Risk warning: the terminal demand is greatly reduced; Lithium prices fell sharply; Lithium ore capacity release exceeded expectations; Assumptions are less than expected, etc
