According to foreign media reports, recently, the state-owned enterprise Mutapa Energy Resources of Zimbabwe announced that its Sandawana lithium mine project confirmed 39.9 million mt of JORC-compliant lithium resources, of which 28.7 million mt are measured resources, accounting for about 72% of the total. It is reported that the resources confirmed at the Sandawana lithium mine project this time cover only about 30% of the approximately 3,800-hectare mining right area. The first phase of exploration for the project lasted 11 months, completed 103,000 meters of drilling and 33,000 sample analyses, with a cumulative investment of $24 million.

Zimbabwe has recently continued to advance its domestic lithium-processing policy while simultaneously improving the logistics infrastructure used for lithium concentrate exports. At first glance, the construction of new railway transport links appears inconsistent with the proposed restrictions on concentrate exports. In practice, however, the two policies correspond to different stages of industrial development. Railway investment is intended to support current mine operations, export earnings and logistics cost reductions, while export restrictions are designed to encourage the extension of the domestic value chain into intermediate products such as lithium sulphate. The principal objective is therefore not to halt lithium exports immediately, but to use export permits and policy deadlines to retain a greater share of processing investment and capital expenditure within Zimbabwe. From a policy perspective, the restrictions are better understood as an industrial investment requirement than as a conventional trade ban. Zimbabwe remains dependent on mineral exports for foreign-exchange earnings, tax revenue and employment. A complete suspension of concentrate exports before sufficient domestic processing capacity has been established would therefore conflict with the country’s near-term economic interests. A more probable policy path would be to link export quotas to the construction progress of processing facilities, local investment commitments and the operating status of individual projects. Under this framework, export access would effectively be exchanged for additional domestic investment. The main constraint on implementation is that Zimbabwe’s existing processing capacity is largely captive capacity built to serve individual mining projects. The country has not yet developed a market-based processing system capable of handling concentrate from multiple third-party suppliers. Concentrates from different mines vary in lithium grade, impurity content, particle size and metallurgical characteristics. Third-party processing therefore requires not only technical adaptation, but also commercial arrangements covering recovery rates, treatment charges, material losses and product-quality responsibilities. As a result, nominal processing capacity should not be treated as equivalent to effective capacity available to the broader industry. The existence of several lithium sulphate plants does not necessarily provide a viable conversion route for mines without their own processing facilities. This constraint is likely to reshape the competitive structure of Zimbabwe’s lithium industry. Project value will increasingly depend not only on resource size, grade and mining costs, but also on access to processing capacity, export permits, logistics infrastructure and end-market channels. Vertically integrated companies controlling mines, concentrators, conversion plants and customer relationships in China will be better positioned to comply with the policy and monetise their resources. Smaller mines without processing facilities may become increasingly dependent on toll treatment, offtake agreements, equity partnerships or asset sales. The export restrictions could therefore raise the domestic processing ratio while also accelerating the concentration of lithium resources in the hands of a limited number of integrated operators. For the Chinese lithium supply chain, the policy does not imply that Zimbabwean lithium resources will permanently disappear from the market. Rather, the form in which those resources enter China and the channels through which they are traded are likely to change. Part of the current concentrate supply may eventually be exported as lithium sulphate or other intermediate products. At the same time, supply may shift from a relatively fragmented network of miners and traders towards a smaller number of integrated producers. This would reduce the volume of African concentrate directly available to independent Chinese lithium refiners and increase the share of material moving through long-term offtake agreements or internal corporate supply chains. The principal market impact may therefore be reflected less in a substantial reduction in annual resource supply and more in changes to supply timing and spot-market liquidity. During the transition, export-quota adjustments, delays to processing projects and changes in product form could create volatility in mine inventories, export volumes and Chinese arrivals. When downstream inventories are low or freely tradable concentrate is limited, such disruptions can be amplified and translated into a higher short-term risk premium for both spodumene concentrate and lithium carbonate. The expansion of railway infrastructure is not inherently inconsistent with the domestic-processing policy. Railways can support current concentrate exports, but they can also transport lithium sulphate, processing equipment and chemical inputs in the future. The more important issue is that the pace of policy implementation may exceed the development of processing capacity, electricity supply, chemical inputs and commercial infrastructure. If the restrictions are implemented too rapidly, they may result in production cuts, inventory accumulation and project delays. A sufficiently long transition period would allow processing capacity to develop gradually while limiting disruption to existing exports and employment. Overall, Zimbabwe is more likely to adopt an approach based on formal restrictions, transitional quotas and investment-linked exemptions , rather than impose a complete and immediate halt to all concentrate exports. The long-term effect of the policy will not be to reduce the country’s underlying lithium resource base, but to redistribute processing margins and control across the value chain. The companies best positioned to benefit will not simply be those that own lithium resources, but those able to integrate mining, processing, logistics, export access and downstream customer relationships.

Rio Tinto released its production results for the second quarter of 2026. According to the report, Rio Tinto’s lithium production in Q2 stood at 14,600 tonnes of lithium carbonate equivalent (LCE), up 20% year-on-year and 15% quarter-on-quarter. By product, lithium carbonate output reached 13,900 tonnes, lithium hydroxide output was 5,300 tonnes, and other specialty lithium products stood at 1,100 tonnes on an LCE basis. Rio Tinto noted in the announcement that, as its lithium business is vertically integrated, the production volumes of different lithium products should not be directly added together. In terms of production changes, Rio Tinto’s Q2 lithium output growth was mainly driven by the ramp-up of the Rincón starter plant in Argentina, as well as the earlier-than-scheduled first production from the Sal de Vida and Fénix 1B projects. The Rincón starter plant produced 385 tonnes of LCE in the second quarter. Year to date, Rio Tinto’s lithium production declined 7% year-on-year, mainly due to the Mt Cattlin mine being placed on care and maintenance at the end of March 2025, which weighed on hard-rock lithium output. On project progress, construction of the full-scale Rincón lithium plant is advancing and remains in the early execution stage. Current work is focused on key infrastructure, including camp facilities, utilities and pipelines, while site earthworks, early preparation works and supporting infrastructure construction are also underway. The Sal de Vida project achieved first production ahead of schedule in Q2 and is currently in the commissioning stage. The Fénix 1B expansion project also delivered first production ahead of schedule in Q2 and has entered commissioning. Rio Tinto previously disclosed that Sal de Vida has a planned capacity of 15,000 tonnes of LCE per year, while the Fénix 1B expansion has a planned capacity of 10,000 tonnes of LCE per year. In terms of prices, the average CIF China, Japan and Korea price stood at US$22,043/tonne in the second quarter of 2026. Meanwhile, Rio Tinto’s average realised lithium product price in the first half of 2026 was US$18,960/tonne LCE. In addition, the Nemaska Lithium project is planned to deliver first production in 2028. Following an in-depth review initiated in the first quarter, the construction pace of its Bécancour processing plant will slow in 2026. The plant is currently more than 70% complete. Necessary activities such as asset preservation and site integrity works will continue, while other activities will be paused or deferred and the contractor workforce will be temporarily reduced. Rio Tinto previously disclosed that the Nemaska Lithium project is located in Quebec, Canada, with Rio Tinto holding a 50% interest. The project has a planned capacity of 28,000 tonnes of LCE per year, producing integrated lithium hydroxide. SMM believes Rio Tinto’s year-on-year and quarter-on-quarter growth in Q2 lithium output mainly reflects the gradual production ramp-up of its Argentine brine assets, particularly as Sal de Vida and Fénix 1B achieved first production ahead of schedule. This indicates that the execution progress of the company’s brine lithium project portfolio is slightly ahead of previous expectations. In the short term, as these new projects remain in the commissioning and ramp-up stages, their actual contribution to global lithium supply still requires further observation. In the medium to long term, as Rincón, Sal de Vida and the Fénix expansion continue to advance, Rio Tinto’s capacity weighting in South American brine lithium resources is expected to increase further. However, the care and maintenance status of Mt Cattlin and the slower construction pace at Nemaska also suggest that, under the current lithium price environment, mining companies are continuing to adjust development priorities across different assets based on project economics and capital expenditure pressure.

SMM, July 15: According to an announcement by IGO Limited (ASX: IGO), the company has entered into a binding share purchase agreement with Global Lithium Resources Limited (ASX: GL1) to divest its Nova Nickel Operation in Western Australia. The transaction assets include the Nova processing plant and related infrastructure, while Global Lithium will also assume the associated rehabilitation obligations. The total transaction consideration is A$7 million, comprising A$3 million in cash, A$2 million in GL1 shares, and A$2 million in deferred cash payable 12 months after completion. According to the announcement, Global Lithium plans to use Nova’s existing processing facilities and supporting infrastructure to process pegmatite ore from its 100%-owned Manna Lithium Project. The Manna project is located approximately 170 km from Nova by road. Global Lithium is currently advancing studies for the integrated Manna-Nova operating model and plans to commence lithium concentrate production through Nova by mid-2027. IGO stated that Nova remains in operation and is expected to cease mining activities as planned in Q4 2026. The transaction is expected to complete after the end of mining operations at Nova and remains subject to customary conditions precedent, including approval from the Australian Competition and Consumer Commission (ACCC). SMM believes that the core significance of this transaction lies in GL1’s ability to leverage existing processing and infrastructure assets, thereby reducing the development timeline and capital expenditure pressure for converting the Manna lithium project from a resource asset into a lithium concentrate production operation. If the integrated Manna-Nova plan progresses smoothly, the Nova assets could be transformed from nickel operation infrastructure into a spodumene concentrate processing platform, potentially contributing incremental supply from Western Australia. However, given that the planned production start is in mid-2027, and that the transaction remains subject to regulatory approval and the completion of project integration studies, the short-term impact on global lithium concentrate supply and prices is expected to be limited. The transaction is more indicative of marginal progress in the medium- to long-term development of overseas hard-rock lithium resources.

Price Trends In the first half of 2026, domestic lithium hydroxide prices followed a trajectory of "surge – high-level volatility – softening decline," with the price center first rising and then falling amid the interplay of multiple factors. January: Prices surged sharply. Concentrated maintenance shutdowns at major lithium salt producers tightened spot supply. Combined with persistently rising costs of lithium carbonate and lithium ore, lithium salt producers held firm on pricing, pushing the monthly average price up by 65% month-on-month. Although ternary material manufacturers maintained just-in-time procurement and remained cautious on spot orders, and some import flows returned due to domestic-international price spreads, the phase of supply shortages and cost support still drove prices to a high level. February: Prices fluctuated at high levels with thinning trading. Macro sentiment drove overall lithium prices downward, but producers' firm pricing stance persisted. Downstream ternary manufacturers, having ample inventories and some entering maintenance, saw eased raw material shortages, with procurement mostly based on monthly average prices. During the Chinese New Year holiday, transportation of lithium hydroxide, classified as hazardous chemicals, stalled, leading to a seasonal quiet period; post-holiday restocking demand was tepid, limiting upside momentum, and prices oscillated widely throughout the month. March: Gains narrowed notably. Cell manufacturers' offtake fell short of expectations, and new orders for ternary materials were limited. Additionally, increased customer-supplied materials in mid-month sharply reduced spot demand, leading to subdued trading and an upward price channel that stalled. The monthly average price rose only 3.4% month-on-month. April: First down then up. In the first half, limited new ternary orders and scarce spot demand put mild pressure on prices; in the second half, pre-holiday stocking and new orders drove increased inquiries from ternary producers, while sharp rises in lithium carbonate and ore prices pulled lithium hydroxide higher. The monthly average price rose 2.73% month-on-month. May: Rose then fell. In the first half, positive demand expectations and supply-side disruptions lifted lithium carbonate and ore prices, pulling lithium hydroxide higher in tandem; in the second half, sentiment turned weaker, with more trades settled via negotiation between traders and material mills. As ternary demand trends became clearer, upstream producers softened their price support, prompting a modest pullback. The monthly average price reached RMB 174,000/ton, up 13.6% month-on-month. June: Prices fell notably, with range-bound volatility intensifying. Frequent supply disruptions on the lithium resource side amplified market volatility significantly, prompting holders to adopt a cautious stance and quote prices in line with market conditions. Upstream producers adjusted prices flexibly, while traders maintained a high discount (over RMB 15,000/ton against the lithium carbonate futures main contract). On the demand side, total ternary material demand remained weak month-on-month, but within the RMB 135,000–145,000/ton range, downstream buyers showed strong willingness to stockpile on dips, providing some bottom support and exacerbating range-bound fluctuations. The monthly average price fell 11.52% month-on-month. Looking at the price trends, the correlation between lithium hydroxide prices and lithium carbonate futures prices has strengthened over the past six months. This is partly because upstream producers use a "lithium carbonate price × discount factor" formula as a floor price in their pricing. On the other hand, traders capitalize on the price spreads between domestic and overseas lithium hydroxide and between hydroxide and carbonate, by importing lithium hydroxide and pricing their sales with reference to lithium carbonate futures, further reinforcing this price linkage. Production In the first half of 2026, domestic total lithium hydroxide output reached 172,000 tons, up 21% year-on-year, driven by relatively robust downstream demand, with notable incremental growth. By output structure, the refining segment contributed the most, accounting for about 88%. Within this, the gradual ramp-up of new production lines at leading companies added some volume, while other enterprises maintained steady output backed by downstream orders, resulting in an 18% year-on-year increase for the overall refining segment. For the causticization segment, most active producers sustained stable operations, and the industry CR5 reached 72% in the first half, indicating a persistently high market concentration. From the capacity utilization perspective, although some capacity has been switched to lithium carbonate production, the operating rate for the lithium hydroxide industry has consistently lingered below 50% over the past six months, reflecting an ongoing overcapacity trend. Costs and margins: For the refining segment, lithium ore feedstock remained relatively tight in the first half of 2026, with ore prices staying elevated and closely correlated with lithium carbonate prices, providing strong cost support for lithium hydroxide. As a result, non‑integrated producers faced notable pressure on the sales side, and their product discount prices did not decline further, which in turn provided marginal support for profit margins at current price levels. For the causticization segment, the supply of salt‑lake‑based lithium salts has increased over the past six months, making causticization feedstock relatively ample. The linkage between actual procurement costs and industrial‑grade carbonate quotes has weakened, which has alleviated cost pressures for enterprises that purchase lithium carbonate externally, leading to actual profitability in the causticization segment being better than theoretical estimates. Import and Export The import‑export landscape has seen a notable reversal. On the export front, since the second half of 2025, some overseas ternary material producers have shifted to entrusting domestic tolling processors, resulting in products that would have been exported being delivered domestically instead, effectively suppressing export volumes. At the same time, overseas demand for ternary materials has remained persistently weak, reducing foreign buyers' appetite for Chinese lithium hydroxide. This, combined with the gradual ramp‑up of overseas local production lines, has collectively kept export volumes at low levels over the past six months. On the import side, weak overseas demand, high accumulated inventories, and arbitrage opportunities have driven import volumes to remain relatively elevated, further reinforcing the net import trend. Supply‑Demand Balance and Inventory The surge in import data made most months in the first half of the year oversupplied. However, from the perspective of directly usable lithium hydroxide products, the market as a whole remained in a relatively tight balance, providing effective support for upstream price control. As for inventory, current lithium hydroxide stock levels have improved significantly compared with the same period last year. This is mainly attributable to two factors: first, part of the inventory has been absorbed into the market by being converted into lithium carbonate; second, active producers have flexibly adjusted their output pace, keeping current inventory days at around one month. Future Outlook Looking ahead, although the LFP route continues to squeeze the ternary route, ternary materials currently have no rival in the high‑nickel segment. In addition, the cost advantages of 6‑series materials offer more possibilities for the ternary route. Based on end‑user production schedules, ternary power demand in the second half of 2026 is expected to maintain a sound performance, growing by approximately 36% compared with the first half. This will drive a roughly 7% sequential increase in ternary material output in the second half. As ternary materials continue to move toward higher nickel content, this brings an incremental demand trend for lithium hydroxide. Meanwhile, considering that most lithium hydroxide production lines have flexible switching or carbonation purification capabilities, lithium hydroxide output is projected to grow by about 6% sequentially. Coupled with a modest recovery in overseas ternary demand, the supply‑demand balance for lithium hydroxide is expected to remain tight through 2026–2027. In terms of price, under a market structure with highly concentrated supply, lithium hydroxide prices are primarily determined by the supply‑demand dynamics of its own industrial chain and closely track lithium ore and lithium salt price trends. Prices are currently oscillating in a range above RMB 150,000/ton. Futures Developments As for lithium hydroxide futures, there has been a flurry of related developments in the second quarter. The Guangzhou Futures Exchange (GFEX) and the Lithium Branch of the China Nonferrous Metals Industry Association have both explicitly stated that they will continue to strengthen cooperation and jointly advance the listing of lithium hydroxide and other lithium‑chain futures products. The征求意见稿 of Guangzhou's "15th Five‑Year Plan" for finance also clearly supports GFEX in listing new‑energy futures such as lithium hydroxide. On the industrial side, companies have moved swiftly to follow up. In June, Yahua Group, Shengxin Lithium Energy, and Tianqi Lithium all announced their intention to apply to GFEX for designated delivery factory warehouse status for lithium hydroxide. In addition, Milkyway's shareholders' meeting approved a proposal for its subsidiary to apply to become a designated delivery warehouse for battery‑grade lithium hydroxide at GFEX. According to media reports, lithium salt producers (Ganfeng Lithium, Tianqi Lithium, Yahua Group, etc.) have already positioned themselves in the factory‑warehouse system. However, due to the high‑risk storage requirements of lithium hydroxide—such as strong corrosiveness, exothermic reaction with water, and the need for inert gas protection—no logistics‑focused player had previously entered this category. On the market front, some traders have already made early arrangements in anticipation of futures listing, and the number of merchants participating in lithium hydroxide import trade has noticeably increased. In summary, preparations for the listing of lithium hydroxide futures are progressing in an orderly manner, with positive official signals and accelerating industrial infrastructure development.

From a supply-demand balance perspective, China's lithium carbonate market exhibited a tight balance in H1 2026, with sellers and buyers continuously seeking new equilibrium points amid bargaining.