Guotai Haitong Securities Co., Ltd. has released a research report predicting that beginning in 2025, Tibet's salt lakes will begin to contribute significantly to production. Lakes such as Mamucuo and Lagoi Tso will enter their production phases, with output expected to be gradually released. In the later stages, additional lakes in Tibet, including Jieze Chaka and Longmu Tso, are scheduled to commence operations. Combined with increased output from Qinghai, the overall lithium production from China's salt lakes is projected to continuously rise. Regarding capital expenditure, based on publicly disclosed data from various companies, the investment required for a 10,000-tonne lithium carbonate equivalent project in South American salt lakes exceeds 1.5 billion yuan. The long development cycles and substantial capital outlays mean that only larger corporations possess the financial capacity to invest in lithium extraction from salt lakes. Consequently, lithium resources from these salt lakes are expected to gradually become concentrated among major companies. The primary views of Guotai Haitong Securities Co., Ltd. are as follows:

Salt Lake Extraction: The Lowest-Cost Lithium Process with Room for Further Technological Advancement Lithium production primarily follows three process routes: extraction from salt lakes, from spodumene ore, and from lepidolite. Among these, the salt lake extraction route is the lowest-cost method due to its relatively simpler process and the higher value of its by-products. According to calculations from various companies, the production cost for lithium carbonate from salt lake enterprises in 2024 ranges between 30,000 and 48,000 yuan per tonne. In contrast, the production cost for spodumene-based enterprises is around 80,000 yuan per tonne, and typical lepidolite-based producers also have costs near 80,000 yuan per tonne. This positions salt lake lithium extraction companies on the far left, or most cost-advantaged, part of the overall cost curve. Salt lake extraction technology continues to advance. For instance, the Qinghai Salt Lake Research Institute has developed a new type of highly specific lithium extraction agent that can effectively reduce costs, suggesting potential for further cost reductions in the future. The report recommends Zangge Mining (000408.SZ), with Salt Lake Co., Ltd. (000792.SZ) mentioned as a related target.

The Rise of China's Salt Lakes as a Key Contributor to Lithium Supply China's current salt lake lithium production capacity is primarily located in the Qinghai region. Listed companies such as Salt Lake Co., Ltd., Zangge Mining, and Ganfeng Lithium Group are the main players, with key projects at the Qarhan Salt Lake and Yiliping Salt Lake. Additionally, the East Taijinar, West Taijinar, and Da Qaidam salt lakes are also significant production bases. Starting in 2025, salt lakes in Tibet will begin to play a more substantial role. As lakes like Mamucuo and Lagoi Tso enter production and gradually ramp up output, and with future projects like Jieze Chaka and Longmu Tso coming online later, combined with increased production from Qinghai, the overall output from China's salt lakes is set to rise steadily. Projections indicate that by 2030, China's salt lake production could reach 500,000 tonnes, establishing it as a crucial component of the global lithium supply.

South American Salt Lakes Continue to Add Supply, with Argentina Leading Incremental Growth South American salt lakes are a major source of global salt lake production. The Lithium Triangle region in South America is rich in salt lake resources, with the Atacama Salt Flat remaining a primary production area, yielding approximately 400,000 tonnes of lithium carbonate annually. With the commencement of projects like Mariana, 3Q, and Sal de Vida in Argentina, future production growth from South American salt lakes is expected to be led by Argentina. Bolivia also possesses abundant lithium resources and is anticipated to gradually contribute to supply growth in the future.

Substantial Capital Expenditure Expected to Drive Resource Concentration in Larger Companies Unlike the relatively short development and smelting cycles for hard-rock lithium resources, new salt lake lithium projects have extended construction timelines. In China, the cycle from project initiation to full production is approximately 3.5 years, while in South America, it can take around 5 years from a greenfield site to production. Based on publicly available data from companies, the capital investment required for a 10,000-tonne lithium carbonate equivalent project in South American salt lakes is over 1.5 billion yuan. These long cycles and significant capital expenditures necessitate that only larger companies have the investment capacity for salt lake lithium extraction. As a result, lithium resources from salt lakes are projected to increasingly concentrate within larger corporations.

Risk factors include the potential for significant fluctuations in lithium carbonate demand and the risk that project commissioning may fall short of expectations.