China Halts Exports of Lithium Adsorbents for Electric Vehicle Batteries

Global Impact on Lithium Extraction and Battery Industry / Reuters 

Chinese companies have suspended the export of lithium adsorbents used in electric vehicle (EV) batteries, effective February 1. This move has significant implications for the global lithium extraction industry, as these adsorbents are vital for extracting lithium from solutions containing brine or battery metals. The suspension of exports was communicated by Jiangsu Zhongtai High-Tech, a leading producer of filtration equipment for lithium extraction, to its customers last month. While China is widely considered the world's largest producer of these adsorbents, the exact scale of the market remains unclear due to the lack of publicly available data.

This suspension is part of a broader strategy by the Chinese government, which in January imposed restrictions and threats concerning the export of certain battery and lithium technologies. Under these new measures, Chinese companies must obtain government approval for each export of lithium processing equipment, including adsorbents. This move signals China's intention to leverage its dominance in critical mineral sectors, such as lithium, to assert its geopolitical power, particularly amid the ongoing trade conflict with the United States.

Jiangsu Zhongtai, along with other major suppliers like Sun Resin, is reportedly in negotiations with the government over these export restrictions. Sun Resin's chairman had previously indicated that the company was exploring the transfer of its technology to overseas markets as part of its international expansion plans. Meanwhile, sources close to the situation have revealed that Chinese officials have warned several companies against moving forward with export contracts worth as much as $1 billion, advising them to halt these agreements.

The impact of these export limitations is expected to extend beyond China’s borders. Western oil companies, including ExxonMobil, which had been considering the use of Chinese lithium extraction equipment for a lithium project in Arkansas, may face delays or disruptions. Koch Industries, the major investor in Standard Lithium, a company developing lithium extraction operations in Arkansas, had also agreed to use Chinese adsorbents for their North American operations in 2023. The suspension of exports could jeopardize these plans, given the scarcity of alternative suppliers with the same level of experience in the technology.

In the West, some adsorbent manufacturers have yet to start commercial production, and many still lack the expertise of Chinese firms. TechMet’s CEO, Brian Menell, has emphasized the need for Western companies to innovate their technologies, arguing that they should not rely on outdated methods developed by Chinese companies over two decades ago. Meanwhile, German company Vulcan Energy Resources, which has developed its own adsorbent technology, has seen significant demand from large lithium producers in North and South America seeking to purchase adsorbents or license the technology.

This shift in China's export policy is part of a growing trend of resource nationalism, where countries increasingly restrict the export of critical minerals to safeguard their own interests. With major Western markets now scrambling to find alternative suppliers or develop their own technologies, the global lithium extraction landscape is likely to undergo significant changes in the coming years.