China Daily reported that CITIC Guoan Group signed a strategic cooperative agreement with Bolivia to jointly explore lithium resources in Bolivia's Coupasa salt flats.

CITIC's listed arm CITIC Guoan Information Industry Company Limited said that if the lithium deposit meets minimum expectations, CITIC will submit a proposal to establish JV for extraction. Demand for lithium carbonate, a key ingredient in batteries, is expected to rise sharply in the future as countries increase support for electric cars.

Companies from South Korea, France, Japan and China are competing for lithium resources in Bolivia which is considered to have one of the world's largest confirmed reserves.

CITIC Guoan's operations in Qinghai province reported lower output in the first half of this year as a result of flooding. Qinghai has the largest reserves of lithium in China and accounts for nearly 90% of the national output.

According to the local land and resources bureau, CITIC Guoan and Qinghai Lithium Company are the two largest lithium producers in the province with around 30,000 tonnes of annual capacity.

Industry experts said that lithium resources in Qinghai are of low concentration and cost more to extract than those in Australia and Canada.

The Australia based Galaxy Resources Limited aiming to capitalize on future global demand, began construction in 2009 of a lithium carbonate processing facility in Zhangjiagang, a port city near Shanghai. The processing facility will receive lithium shipped from Australia.

Mr Anthony Tse ED of Galaxy that the facility will begin production in the H1 of this year. Prices of lithium carbonate were about CNY 33,000 per tonne on Aug 5th 2011 slightly lower than the January price of CNY 35,000 per tonne.

According to Mr Wei Chishan an analyst with Shanghai Metals Market demand for electric cars greatly affects the price of lithium carbonate, which is a main component of electric vehicle batteries.

The nation outlined plans in 2010 to boost the number of electric cars on its roads from 9,800 vehicles to 500,000 by 2015. Other countries such as the United States plan to have at least 1 million electric cars on the road by 2015.

Mr Wei said that the well publicized policy has yet to show concrete steps toward implementation. China recently surpassed Japan as the world's largest provider of lithium batteries. It also has about one tenth of the estimated global lithium reserve and is the world's third largest producer of the metal.

(Sourced from www.chinadaily.com.cn)