Lithium has become super-expensive this year as car and battery manufacturers scour the planet for scarce supplies, and as the industry has hit limits on capacity to refine raw materials into specialist chemicals. That means fatter earnings for producers and — as often happens in runaway commodities markets — some unconventional entrants seeking to make a profit.

The ceramics producers of Gao'an city in China's Jiangxi province are a prime example. About 15% of the city's plants have switched from churning out traditional products to making lithium briquettes that can be further processed into chemicals used in battery products according to Albert Li, an analyst at Benchmark Mineral Intellegence.

In part, the change reflects the sector's struggles with overcapacity amid a deep malaise in China's property market and the impact of higher fuel prices. Yet it's also an illustration of how the battery supply chain is scouring every available corner to find new sources of lithium raw materials.

Prices of lithium carbonate, arefined material, have more than doubled from the start of the year in China and rose to a new record of 587,500 yuan ($81,349) a ton on Friday. Ganfeng Lithium Group and Tianqi Lithium — China's top two lithium producers — both posted major gains in quarterly profits last month.

Lithium has long been used to help bolster the strength of ceramics and to produce more vivid colors in glazes. Ceramics and glass still account for about 14% of all lithium demand, though that's about halved in the past decade as requirements in the battery sector have surged, according to the US Geological Survey.

Ceramics factories in Gao'an typically take the sludgy by-product of chemicals production from local lithium refineries and use that in their items. Yet with prices of the battery metal trading at a record, even that refinery waste has jumped in value. That's prompted the companies to reprocess it into lithium-containing bricks and sell them back to the refineries as raw material.

While the volume of lithium supply being added from the converted ceramics lines will be limited, it's a shift that illustrates the ongoing strength of demand in the world's key hub of electric-car batteries, according to Benchmark's Li.

Another factor in the hunt for new sources of supply is that the material being produced in Gao'an is derived from lepidolite, a lithium-bearing mineral that's often been overlooked as a lower-quality source of the metal. The mineral is under new focus in battery supply chains, and companies including top battery maker Contemporary Amperex Technology and Gotion High-Tech have invested in lepidolite resources.

By Annie Lee, Bloomberg. Find more news at bloomberg.com

If you are interested in investing in one of our exciting and lucrative opportunities please see the following steps:

• Open a Huber Management account and become a valued client or log-in if you are already a client.
• Speak to an advisor about your investment objectives and requirements
• Choose from multiple investment vehicles that are tailored to your own specific investment objective.

We offer a full brokerage service to ensure we manage every aspect of your investment strategy including risk analysis and routine updates on your position.

Back To News & Insights