The dramatic rise of the lithium industry

Roskill reports that Chinese lithium producers Tianqi and Ganfeng reported 2016 results last week, Tianqi’s 2016 revenue more than doubled to $547 million and profit increased three-fold to $390 million. Ganfeng also saw a doubling in revenue, to $400 million, but profit was up only 61% to $66 million; its performance lagging Tianqi as cost of sales increased – Ganfeng is more exposed to market prices for feedstock – and due to losses at its battery subsidiary Shenzhen Mbell.

The revenue of Tianqi and Ganfeng means Chinese lithium producers generated over $1 billion in sales in 2016. When put alongside the earnings of SQM ($515 million), Albemarle ($669 million), FMC ($264 million), Orocobre (~$110 million – pictured) and other smaller producers, the lithium industry in 2016 had a value of >$2.5 billion, more than double that of 2012. The near-doubling in price has been the main near-term catalyst for industry value growth, but output volumes increasing almost 25% in 2016 also contributed.

These leading six producers are now investing in future resources and capacity, and will be further boosted by Beijing’s announcement last week that it will restrict investment in conventional ICE automotive production in favour of electric vehicles. Another strong year for electric vehicles sales means this nascent sector accounted for almost 50% of lithium-ion battery demand in 2016.