Chinese energy firms invest in LiOH2 production

Chinese energy companies continue to invest in new production capacity for lithium hydroxide to meet growing demand from lithium-ion batteries used in electric vehicles.

Jiangxi Nanshi Lithium and Electronics will invest 500mn yuan ($72mn) to build a 10,000 t/yr plant in Yichun city in south China's Jiangxi province. The plant is scheduled to start production in March 2019. Established in January last year, Jiangxi Nanshi has a 60,000 t/yr plant for lithium carbonate.

Guangxi Tianyuan New Energy Material will invest Yn510mn to build a 25,000 t/yr plant for battery-grade lithium hydroxide in southwest China's Guangxi province. It has also obtained funds from Fengchao Energy, a subsidiary of domestic major carmaker Great Wall Automobile. The plant will launch pilot production in March next year.

Demand for lithium-ion power batteries has risen sharply in response to China's growing new energy vehicle (NEV) sector. China sold 860,000 and produced 879,000 NEVs during January-October, up by 75.6pc and 70pc respectively from a year earlier, with the country on target to produce 1mn in 2018 and 2mn in 2020.

Power batteries produced using lithium hydroxide typically have stronger performance and longer battery life than batteries made by carbonate. Growing use of ternary cathode materials with higher nickel content, which use lithium hydroxide as feedstock, is expected to lift its demand in the longer term.

Firm demand from the battery sector has prompted lithium salts producers to boost production in the past few years. Domestic lithium salts capacity reached 250,000 t/yr at the start of 2018, up by 47pc from 170,000 t/yr in 2016. Total capacity is 178,000 t/yr for lithium carbonate, 54,000 t/yr for hydroxide and 18,000 t/yr for chloride.

Lithium producers are raising their hydroxide production also outside of China. Tianqi Lithium is developing a hydroxide plant at Kwinana, Australia, while US-based Albermarle is considering a plant further down the coast.

Export prices for 56.5pc grade hydroxide were assessed stable at $15.50-18/kg fob China yesterday.