As lithium prices are on the rise due to the suspension of mining at the lithium mine operated by China's CATL, the world's leading battery company, it could positively impact the performance of the domestic battery industry if lithium prices continue to increase amid a rebound in electric vehicle sales this year.
According to the Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR) on the 5th, the price of lithium carbonate was recorded at 74 yuan (about 14,000 won) per kilogram as of the previous day. Lithium prices hit a record low of 57.7 yuan on June 23, 2021.
The rise in lithium prices is significantly influenced by the reduction in supply after CATL suspended mining at a lithium mine in Jiangxi Province, China, since November 11. The suspension of mining was due to the expiration of the mining permit, and this mine accounts for about 3% of the global lithium supply. Although CATL is pushing for a renewal of the mining permit, foreign media report that mining is expected to be halted for at least three months.
Known as 'white oil', lithium is a key mineral for cathode materials that accounts for about 40% of the production cost of electric vehicle batteries. Corporations such as Ecopro, POSCO FUTURE M, and LG CHEM buy lithium to process it into cathode materials and typically take 2 to 3 months to sell; thus, if lithium prices rise, they can benefit from a lagging effect by using lithium bought at a lower cost.
A source in the battery materials industry noted, 'If lithium prices rise, additional revenue can be anticipated, and there is also an effect of increasing battery prices.'
However, there is a view that this rise in lithium prices is due to supply reduction and may be short-lived. A source in the battery industry stated, 'While a moment will come when lithium supply becomes insufficient due to increasing electric vehicle demand and the growth of the energy storage system (ESS) market, that is not the case now' and added, 'This rise in lithium prices may be temporary.'