The U.S. has discovered the world’s largest lithium deposit—will it seize China’s business?

First is wastewater. Starting from ore selection and screening after mining, extracting one ton of lithium converts over 500,000 gallons of freshwater into wastewater. If untreated, such wastewater seeping underground can contaminate groundwater for up to 300 years. Second is waste material. After water use, drying is required; lithium extraction involves at least two evaporation phases lasting several months each, generating large volumes of solid waste and dust. Mining operations require extensive earthmoving, inflicting massive and irreversible damage to local surface water, vegetation, and wildlife. Take lithium mining in Argentina and Chile as an example: residents near lithium mines believe mining has polluted surface water—the rivers have turned an unnaturally vivid blue. These rivers used to supply drinking water for livestock and irrigation for farmland. Such environmental impacts have even been documented by researchers in academic papers, including one titled: 'Environmental Impacts of Direct Lithium Extraction from Brine.' Therefore, Native American communities residing near the McDermitt Caldera staunchly oppose lithium mining. Local Indigenous peoples refer to this area as a sacred site, containing at least 91 culturally significant locations. Many tribes’ traditional food sources, medicinal plants, and hunting grounds are concentrated around the caldera. In 2021, when plans emerged to mine lithium on the Oregon side of the caldera’s western rim, local Indigenous groups organized opposition—and ultimately succeeded in halting the project. Today, although no new lithium mining development plan has yet been implemented, Indigenous communities have already reorganized to oppose mineral development once again. A 2021 report stated that Indigenous groups urged President Biden to halt lithium mining on their sacred land. Beyond environmental concerns, whether lithium mining and refining can actually yield profits depends heavily on local industrial capacity. The $20,000-per-ton cost of extracting lithium from clay deposits applies only when processed in China. If Americans undertake the process themselves, costs will likely double. For instance, the Kings Mountain lithium mine operated continuously from the 1940s through the 1980s—but later shut down because lithium from South America proved cheaper, rendering Kings Mountain unprofitable. Given current U.S. lithium-extraction capabilities, domestic production clearly lacks cost competitiveness. The only lithium mine currently operational in the United States is Silver Peak, owned by Albemarle Corporation and located in Nevada, covering 13,000 acres. Silver Peak Mine This mine employs just over 80 people and remains the sole active lithium production site in the U.S., producing 5,000 tons of lithium carbonate annually—only a tiny fraction of Albemarle’s global output. The company produces 85,000 tons annually in Chile and operates two additional mines in Australia. Despite possessing domestic resources, Albemarle concentrates its production overseas—solely because domestic production costs are too high! U.S. battery manufacturers understand this reality well. As downstream enterprises, they naturally support sourcing lithium and other raw materials domestically—but mining is both extremely costly and highly politicized. Even if the U.S. were to rapidly scale up domestic lithium mining overnight, it would still confront numerous obstacles—including cost and environmental challenges. In short, lithium mining is not easy. China has already seized the initiative in lithium development. China dominates competitive advantages across virtually every segment of the new-energy industry—from resource extraction to end-consumer products.

Instant wealth—or total loss? Unveiling global lithium mining investment risks!

Third is the Yichun lepidolite production zone in Jiangxi Province. Yichun, Jiangxi hosts the world’s largest lepidolite lithium resource. In recent years, leading enterprises—including Contemporary Amperex Technology Co. Limited (CATL), Fulin Precision Engineering, Jiangte Motor, Yongxing Materials, Guoxuan High-Tech, and Tianhua Ultra-Clean—have continuously invested in Yichun, triggering strong industrial cluster effects. In 2021, Yichun’s lithium carbonate output reached 81,000 tons—accounting for over one-quarter of China’s national total. As of July 2022, Yichun’s lithium carbonate production capacity stood at 180,000 tons, representing nearly 40% of China’s national capacity. According to official projections from Yichun, annual output is expected to exceed 500,000 tons by 2025. Fourth, Chinese enterprises are actively participating in international mining cooperation—with notable results. Australia and Africa boast abundant spodumene resources, while South America’s salt-lake brines offer high-grade lithium with relatively low development difficulty and production costs—making them hotspots for investment. More than 15 Chinese companies—including Tianqi Lithium and Ganfeng Lithium—are engaged in lithium mining overseas, investing in or participating in over 22 projects, soon establishing overseas production bases. Global lithium market investment remains robust, intensifying competition—and mining firms must remain vigilant against investment risks. First, exploration investment enthusiasm remains undiminished, and newly discovered resources are expected to surge rapidly. In 2022, global lithium exploration budgets and the number of exploration companies both soared to record highs. The annual exploration budget rose to $467 million—a 88% year-on-year increase—and was 68% higher than the pre-pandemic peak. The number of exploration companies reached 194—a 75% increase year-on-year—and 42% higher than the pre-pandemic peak—both figures representing the highest levels since 2010. Second, the merger-and-acquisition (M&A) market remains red-hot, yet high-quality, large-scale projects remain scarce. In the first three quarters of 2022, global lithium M&A activity continued heating up, exhibiting a pattern of ‘increasing volume but decreasing value.’ Soaring lithium prices drove a sharp rise in M&A transactions involving small- and medium-sized projects. During the first three quarters of 2022, global lithium-resource M&A transaction value declined 10.7% year-on-year, while the number of M&A projects increased 56.7% year-on-year—including a 59.2% year-on-year rise in small- and medium-sized M&A projects. Third, downstream players across the industrial chain demonstrate strong intent to secure upstream resources—intensifying market competition. In 2022, some downstream enterprises and non-industry players entered the lithium-resource acquisition arena—including Jixiang Chemical, EVE Energy, YAHUA Group, and BYD. Meanwhile, major mining enterprises continued expanding resource portfolios through mine acquisitions—such as Ganfeng Lithium, Chenguang Mining, and Zijin Mining. Chinese enterprises’ lithium-mining M&A transactions sustained growth throughout 2022, totaling 13 deals worth $3.007 billion. Fourth, global lithium-mining enterprises exhibit high concentration—posing entry barriers for newcomers. In 2022, the top three producers—U.S.-based Albemarle Corporation, Chilean Sociedad Química y Minera de Chile (SQM), and Australian Pilbara Minerals—collectively accounted for 52.6% of global output. The top ten producers collectively held 88.9% of global output—indicating extremely high industry concentration. Among them, three Chinese enterprises—Tianqi Lithium, Ganfeng Lithium, and Salt Lake Potash—combined accounted for 17.9%. Fifth, future lithium-salt production capacity will become increasingly geographically proximate to resource sites. From an industrial-chain perspective, stakeholders across upstream and downstream segments all seek to build integrated, synergistic business models—to expand profitability and enhance pricing power.