The global competition for critical minerals is intensifying, with a senior executive from one of China's largest lithium producers cautioning that market forecasts for lithium demand are generally too conservative.
According to a report, Tianqi Lithium Corporation's CEO, Xia Juncheng, stated in an interview that even the most optimistic projections underestimate the rapid rise of emerging battery-powered industries. He highlighted that the swift expansion of electric trucks, mining equipment, and vessels has not been adequately factored into most forecast models, noting, "This will represent a massive incremental increase."
This assessment holds direct implications for investors in the lithium market. Data from the International Energy Agency shows that lithium demand is growing at an average annual rate of approximately 30% this decade, far surpassing the roughly 10% growth seen in the 2010s.
Forecasts from institutions such as Wood Mackenzie, Project Blue, Fastmarkets, and Mysteel indicate that global annual lithium demand will leap from 1.1 million tons last year to a range of 3.6 to 6.3 million tons over the next decade. Wood Mackenzie further predicts that annual demand could exceed 13 million tons by 2050.
**Emerging Applications Represent a Blind Spot in Demand Forecasts**
Xia believes that most conservative forecasts are based solely on electric vehicle sales growth and have not fully accounted for demand from emerging sectors like energy storage, AI data centers, humanoid robots, and drones. He particularly emphasized that the electrification of trucks, mining equipment, and vessels is accelerating. These areas require substantial battery volumes and will constitute a significant addition beyond existing projections.
Simultaneously, he noted that while lithium demand was already on a strong growth trajectory before the current geopolitical tensions, soaring oil prices have further accelerated the shift to electrification—he himself is considering switching to a BYD electric vehicle.
**Obstacles in Resource Acquisition**
Xia pointed out that many countries, upon recognizing lithium's central role in the global transition to electric mobility, have effectively "closed their doors" to mining. This observation reflects the multiple challenges Tianqi Lithium faces in its global resource strategy.
In Australia, Tianqi Lithium holds stakes alongside local miner IGO in the Kwinana lithium hydroxide plant and in Greenbushes, one of the world's largest hard-rock lithium mines. However, the Kwinana refinery continues to incur losses, with IGO fully impairing its investment and calling for its closure, revealing a clear divergence in views. The Greenbushes project is also under pressure after IGO downgraded its production guidance in April this year citing "systemic issues." The Australian government's tightening of foreign ownership rules for critical minerals has significantly reduced the likelihood of Tianqi directly owning mining assets. Xia stated that the company is willing to provide financial support to Australian lithium miners to secure supply, but outright ownership of mines is now difficult to achieve.
**Investing in Solid-State Batteries to Mitigate Profit Cycle Volatility**
Faced with these constraints on the resource front, Xia indicated that Tianqi is increasing investment in new battery chemistry technologies and in battery material recycling and waste processing, with a key focus on solid-state batteries—a technology that replaces the liquid electrolyte used in traditional lithium batteries.
Tianqi holds nearly a 10% stake in Shanghai Aerospace Power Technology and acquired a 2.9% stake in solid-state battery pioneer Weilan New Energy in 2018. It also established a joint venture in Shenzhen with Weilan, holding a 58.5% stake.
These strategic moves are expected to help Tianqi smooth out the profit volatility highly correlated with lithium price cycles. The company's net profit soared to approximately 24 billion yuan in 2022 as lithium carbonate prices hit record highs. Subsequently, lithium prices fell by over 80%, leading to a net loss of nearly 8 billion yuan in 2024. With renewed market optimism about AI-driven lithium demand, Tianqi's net profit rebounded to 1.9 billion yuan in the first quarter of this year.
Xia also addressed issues in the lithium market's pricing mechanism. He noted that the widening gap between lithium futures and spot prices is squeezing the margins of midstream companies—these firms are forced to purchase raw materials at high prices but must sell products to major clients like CATL and BYD at lower prices. He advocated for more flexible pricing mechanisms, including linking benchmark prices to futures and introducing index-based pricing, believing such measures would help stabilize supply and improve profit distribution across the industry chain.
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