Reuters reported that the small Chinese city of Yichun in Jiangxi hopes to become Asia's lithium capital by creating a lithium related industry worth CNY 100 billion over the next 5 years.
The city's mayor said that the metal is in high demand for use in batteries as politicians and automakers push to get more electric and hybrid vehicles on the road. To achieve its ambitious goal, the city which had a total gross domestic product of CNY 70 billion in 2009 has created a lithium industry park sprawling over 20 square kilometers and is wooing investors with land use and tax incentives.
Mr Gong Jianhua the city's mayor said that we are making all our efforts in promoting investments to develop the lithium industry. It planned to develop a complete lithium value chain from mining to auto making. But analysts have warned that over capacity has already started to emerge in China's lithium industry casting a shadow on Yichun's grand plan.
Mr Sang Yongliang an industry analyst with Guotai and Jun'an Securities in Shanghai said that Yichun is on a bumpy road to realize its goal. Tibet and Sichuan in China also have large lithium reserves and lithium resources in the southeastern province of Jiangxi are largely in lepidolite that may prove more costly to extract. It's very hard to grow a complete lithium industry from just a mine the mine is not among the best in China.
Mr Sun Yuan a metal industry analyst with Gold State Securities agreed that extraction from rock hard lepidolite did not represent the future of lithium mining. He said that it is a kind of sunset technology. The production usually involves huge waste. Only if you can sell the waste solid to cement or glass makers can you keep costs competitive otherwise it is hard to do so.
Chinese carmaker BYD said that in September it had paid CNY 201 million for an 18% stake in Zhabuye Lithium which owns 20 year exclusive mining rights for the Zhabuye salt lake, the biggest lithium mine in China.
Mr Gong the mayor said that he was confident Yichun was set to become a hot spot in the lithium industry. Companies around the world are looking at the new sector, and I don't think there will be money problems. But he noted that technology issues and policy uncertainties may hinder the development of a lithium industry in Yichun. And there are other unexpected obstacles.
He said that at one site in our industrial park, more than 400 engineering vehicles were working together. But the recent short supply of diesel has left many of the machines idle.
(Sourced from Reuters)
