Compelling reward/risk ratio, page-149

I think there're many similarities between lithium and iron ore industry, mainly demand started and driven by China, China highly depends on import (over 80%), pricing mechanism initially was on offtake, no real market price.

Global lithium production for 2023 is around 1 million tons LCE (full list below), China domestic production is around 190Kt LCE, so only 19% of the global supply is from China. Obviously, there're large converted lithium production mainly from spodumene concentrates imported from Australia and a small portion from Zimbabwe.


Ganfeng pointed out total China lepidolite production for 2022 was 75Kt LCE in their annual report. Many other research houses put a much higher figure for China lepidolite production.





He's the list I think it's reasonable,


Total China lepidolite production in 2023 is likely to be around 102Kt LCE, Where Goldman Sachs put 141Kt LCE which is 38% inflated extra supply from China.

GS expects China lepidolite production in 2024 will increase to 252Kt LCE. That is certainly inaccurate. The two major planned projects, are from CATL and Gotion High Tech (two battery producers), 120Kt LCE each by 2025. BUT both of their lepidolite project grade are same, at 0.27% Li2O, to produce one ton LCE, need to process 300 ton ores. Massive waste is a big issue. China is now relatively strict on environmental issues. Over past 12 months, there were two temporary shutdown for environmental issues. The key point is those two projects are high cost, break-even point for those two projects, is estimated to be around CNY125,000-195,000 per ton (~US$18k - US$28k per ton LCE). Currently China spot lithium carbonate price is around US$14k per ton.

BTW, China domestic iron ore all in cash production cost was US$69.40/ton. Global big 4 iron ore producers' cash cost is around US$20/ton.
Today's iron ore price is US$142/ton.

Current lithium spot price will definitely force some producers out as it is already happening in China, around total 45.6Kt LCE capacity was shut down in November where lithium spot price was between US$24k and US$16k per ton. CXO is now under review.

At end of the day, it's big producers that win the game, just like iron ore.

PS. Those listed global production is shown on equivalent LCE, to produce hydroxide or carbonate, there are some losses in conversion, so needs to slightly adjust to compare with global demand.

All imo.