Chinese iron ore miner Hainan Mining Co Ltd said on Monday it would invest 1.065 billion yuan ($164 million) in a plant to make battery-grade lithium hydroxide as it looks to cash in on booming demand in the electric vehicle (EV) sector.
The company said the project would be located in Dongfang in its home island province of Hainan, in southern China, and would produce 20,000 tonnes per year of lithium hydroxide, a chemical favoured in lithium-rich EV batteries.
The company’s decision to branch out from iron ore to lithium comes as prices for the latter have roughly doubled so far in 2021, amid a strong rebound in demand and projections of looming shortages following a three-year downturn.
Record-high iron ore prices in the first six months of 2021 saw Hainan Mining’s January-June net profit surge almost 3,000% year-on-year
“Hainan province is closer to Australia, the main source of spodumene raw material for the project,” the company said in a filing to the Shanghai Stock Exchange, referring to the lithium-bearing mineral that can be converted into battery chemicals.
The island “has obvious maritime logistics advantages compared to Jiangxi and Sichuan, the main producers of lithium hydroxide in the mainland,” it said, adding that construction of the project would take 18 months.
China’s landlocked Jiangxi and Sichuan provinces are home to Ganfeng Lithium and Tianqi Lithium respectively, two of the world’s top lithium producers.
Hainan Mining noted that the lithium market was highly competitive, given the rising popularity of battery materials.
Chinese battery maker EVE Energy was another company to recently venture into lithium production, announcing a 1.8 billion yuan joint venture last month.
($1 = 6.4847 Chinese yuan renminbi)