Concentration of Lithium Refining in China

Introduction

Fig. 1: Concentration of Ore Deposits. [2] (Courtesy of the USGS)

China, a largely industrial economy, holds more than two-thirds of the world's lithium refining capacity. While reserves are concentrated within the Lithium Triangle - Bolivia, Argentina, and Chile - the raw mineral more often than not passes through Chinese factories to be processed into lithium carbonate and lithium hydroxide before being used in battery production. According to Lithium Bridge, an U.S. battery consortium led by Argonne National Laboratory, China controls > 70% of processed energy materials production and > 60% of energy materials purification and refinement. [1]

Lithium Refining Process

Lithium is largely derived from two sources - ore and brine. Ore is mined similar to most other rare earth metals, dug from the ground and transported to be crushed, mixed with chemicals, and crystallized into a usable compound. Lithium-rich brine is denser than water and collects in underground aquifers. It is pumped to the surface and allowed to evaporate for nearly 2 years before containing a sufficiently rich concentration of lithium to be chemically refined and produce a compound. Fig. 1 depicts the wide distribution of ore resources, particularly in North America and Africa. Brine deposits are more concentrated in the Western Hemisphere. Fig. 2 illustrates heavy concentration of brine deposits in the Western United States and the aforementioned Lithium Triangle. Both sources of lithium are primarily harvested outside China and the majority is transported to be refined in China. [2]

Refinement Concentration and Considerations

Fig. 2: Concentration of Brine Deposits. [2] (Courtesy of the USGS)

In 2022 the United States passed the CHIPS and Science Act. A stated goal was to advance critical minerals strategies and eliminate national reliance on materials subject to supply disruptions. [3] Over 90% of operating battery capacity in the United States comes from lithium-ion based batteries. [4] This lends itself to a consideration of whether the CHIPS Act appropriately addresses these dependencies and raises the question as to how the US will eliminate this reliance in accordance with the stated plan. September 2025 saw the United States issue a $2.23 billion loan to Lithium Americas Corporation (NYSE:LAC), with warrants resulting in a 5% equity stake in the LAC-General Motors Thacker Pass joint venture aimed at creating the largest confirmed resource lithium mine in the United States. [5] Table 1 shows that 700kt LCE (lithium carbonate equivalent) were refined in 2022. 458kt were refined in China, meaning 65% of all global refining went through one nation. [6] Much of this is spodumene mined in Australia. In 2022 Australia accounted for 50% of all lithium extracted, of which 98% was exported to China for refining. [7]

The global push for a clean energy transition hinges on having sufficient storage to meet peak demand. For now, lithium battery storage constitutes a majority of this capability, with raw materials passing through Chinese refineries before being processed into critical components for batteries. The CHIPS Act aims to achieve the elimination of national reliance on unstable supply chains, meaning the current Chinese dominance of lithium refining is likely to see change.

© Harnoor Mann. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.

References

[1] "Building a Robust and Resilient U.S. Lithium Battery Supply Chain," Li-Bridge, February 2023.

[2] D. C. Bradley et al., "Lithium" in Critical Mineral Resources of the United States - Economic and Environmental Geology and Prospects for Future Supply, ed. by K. J. Schulz et al., U.S. Geological Survey, Professional Paper 1802, 2017.

[3] 117th Congress, "CHIPS and Science Act of 2022," Pub. L. 117-167, 136 Stat. 1366, 9 Aug 22.

[4] "Battery Storage in the United States: An Update on Market Trends," U.S. Energy Information Administration, July 2020.

[5] T. Arbel, "U.S. to Take Equity Stake in Lithium Americas and Its Nevada Mining Project," Wall Street Journal, 1 Oct 25.

[6] "Critical Minerals Market Review 2023," International Energy Agency, December 2023.

[7] "Resources and Energy Quarterly, September 2023," Australian Department of Industry, Science and Resources, September 2023.