New energy vehicles are on fire Is there enough phosphorus in China

Since 2021, sales of new energy vehicles have grown rapidly, and the demand for upstream raw materials has increased
significantly.
In recent months, the development of phosphorus resources has suddenly increased, and many phosphorus chemical companies have announced that they will cut into the supply chain of new energy vehicles and invest in the construction of lithium iron phosphate projects
.
Phosphorus is a non-renewable resource
.
According to the US Geological Survey, China's phosphate ore base reserves in 2021 will be 3.
2 billion tons, which is only enough for 30 years
at the current average annual rate of about 100 million tons.
According to Baichuan Yingfu data, 71% of China's phosphate rock was used to make fertilizers in 2021, and phosphorus resources are critical to
China's food security.
The phosphorus resource consumption brought by new energy vehicles will break the original balance between
supply and demand.

The short-term impact is small

At present, the power batteries of new energy vehicles are mainly lithium iron phosphate batteries and ternary lithium batteries
.
Phosphorus resources are mainly consumed on lithium iron phosphate, the cathode material of lithium
iron phosphate batteries.
Although the lithium hexafluorophosphate used in the electrolyte of the power battery also consumes phosphorus resources, its consumption is much lower than that of the cathode material, and the influence of
the electrolyte can be ignored for the time being.
According to the calculation of Everbright Securities Research Institute, each kWh lithium iron phosphate power battery requires 2121 grams of cathode material, 0.
73 liters of electrolyte, more than 80% of the electrolyte is an organic solvent, and only about 10% of the mass is lithium hexafluorophosphate material
.

Before 2021, the market for new energy vehicles was small and consumed limited phosphorus resources, accounting for only 0.
41%
of the country's total phosphate ore consumption in 2020.

In 2021, sales of new energy vehicles in China soared by 157%.

According to the China Automotive Power Battery Industry Innovation Alliance, China's lithium iron phosphate power battery production in 2021 will be 125.
4 GWh
.
Data obtained from Hubei Xingfa Chemical Group Co.
, Ltd.
and Sichuan Development Long Python Co.
, Ltd.
show that 1 GWh of lithium iron phosphate power battery requires about 2,500 tons of lithium iron phosphate cathode materials
.
The production of 1 ton of lithium iron phosphate requires the consumption of 4.
3 tons of phosphate ore (the remaining phosphorus resources in the preparation process can still be converted into phosphate fertilizer).

In other words, the lithium iron phosphate power batteries produced in China in 2021 consumed a total of 313,500 tons of lithium iron phosphate, corresponding to 1.
348 million tons
of phosphate ore.

In 2021, China's phosphate ore production was 103 million tons, and new energy vehicles consumed only 1.
3% of phosphorus resources, which shows that the impact is not large
.

Long-term demand is great

However, the forecast for new energy vehicles is getting bigger and bigger
.

In 2021, China's NEV sales were 3.
52 million units, a y/y increase of 157%.

The China Association of Automobile Manufacturers predicts that new energy vehicles will reach 5.
5 million units in 2022, a year-on-year increase of more than
56%.
According to CITIC Securities, China's new energy vehicle sales will reach 13 million units
in 2025.
According to Chen Qingtai, chairman of the China Electric Vehicle 100 Association, China's new energy vehicle sales will exceed 15 million in 2030, and BYD Chairman Wang Chuanfu predicts that China's new energy vehicle sales will account for 70%
in 2030.

Almost all of the growth of these new energy vehicles is based on
the demand for lithium batteries.

Lithium iron phosphate batteries have low cost and good safety, but low energy density; Ternary lithium batteries have high energy density, but they require metals such as cobalt and nickel, so the cost is higher
.
Although there are a variety of technical routes for new energy vehicle power batteries, competing with each other and losing each other, before 2030, lithium iron phosphate batteries can still occupy a dominant market position
with cost and performance advantages.

Since 2020, BYD has released lithium iron phosphate blade batteries, which have increased the energy density of lithium iron phosphate batteries, the market share of lithium iron phosphate batteries has continued to increase, and the growth rate of production has also exceeded the growth rate
of the new energy vehicle market.
From the current mainstream lithium iron phosphate battery and ternary lithium battery, the market share of lithium iron phosphate battery has surpassed that of ternary lithium battery
.
In the whole year of 2020, the whole year of 2021 and the first half of 2022, the production of lithium iron phosphate batteries accounted for 41%, 57% and 60% of China's power battery production respectively, which continued to rise; The proportion of ternary lithium batteries is declining, 58%, 43%, and 40%
respectively.

In 2021, China's lithium iron phosphate power battery production increased by 267.
7% year-on-year, and in the first half of 2022, it increased by 226.
8%
year-on-year.
During the same period, China's new energy vehicle sales grew by 157% and 120%
year-on-year, respectively.
According to data from the China Automotive Power Battery Industry Innovation Alliance, in the first half of 2022, China's lithium iron phosphate battery production was 123.
2 GWh, and it is expected to reach 250.
8 GWh
for the whole year.
In other words, China's lithium iron phosphate battery production may increase by 100% year-on-year in 2022, much higher than the 56% year-on-year growth rate
of new energy vehicles.

The balance of resources is difficult to maintain

There is one figure worth paying attention to: the production-to-storage ratio
.

China has long been the world's largest producer of
phosphate ore.
In 2021, China's phosphate ore production accounted for 38.
6% of the world's total production, and China's phosphate ore reserves in the same year were 3.
2 billion tons, accounting for 4.
5% of the world's total reserves, ranking second
.
In other words, China's phosphate ore reserve-to-production ratio is 38, ranking seventeenth
among the 23 major phosphate ore producing countries.
It can be seen that the overexploitation and development of phosphate mines in China has become very serious
.

China's phosphate ore resources are mainly used for the production of
phosphate fertilizers and phosphate chemical products.
In 2021, 71% of China's phosphate ore production was used to produce phosphate compound fertilizer, and the rest was used to produce yellow phosphorus, phosphate and other
phosphides.
According to the national conditions, it can be said that the usefulness of phosphate ore resources is basically immovable
.

Phosphorus is an important non-renewable resource and has been listed as one of the 24 national strategic minerals by the Ministry of
Natural Resources of China.
In view of the policy orientation of protecting non-renewable resources in Hubei, Guizhou, Sichuan and other large phosphate resource provinces after 2017, greatly raising the entry threshold for phosphate ore resource mining, cracking down on illegal mining, and improving environmental protection requirements and supervision, China's phosphate mining has basically maintained a balance
.

However, since 2021, phosphate mining has suddenly expanded
.
The price of phosphate ore in the main producing areas represented by Hubei and Guizhou has been frequently raised
.
As of August 5 this year, the average price of 30% grade phosphate ore in the mainstream area is about 1100 yuan / ton, a significant increase of 175%
from the beginning of 2021.
The reason is that the phosphate ore consumed by new energy vehicles continues to increase, which has raised the price of phosphate ore and gradually broken the balance between
supply and demand of phosphorus resources.

Data show that China's lithium iron phosphate production in 2021 will be 435,500 tons, a year-on-year increase of 212%.

In January~June 2022, China's lithium iron phosphate production was 340,000 tons, an increase of 122%
over the same period last year.
If the growth rate of lithium iron phosphate battery production is consistent with the growth rate of new energy vehicles by 2030, the output of lithium iron phosphate power battery will reach 885.
2 GWh, consuming 9.
516 million tons
of phosphate ore.
In other words, by 2030, new energy vehicles will consume 9.
5%
of phosphorus resources.

The distribution of phosphate ore resources in China is relatively concentrated, mainly including six phosphate ore production bases
in Kunyang, Yunnan, Jingxiang, Yichang, Hubei, Wengfu, Guizhou, Kaiyang, and Jinhe-Qingping, Sichuan.
With the large-scale exploitation, the basic reserves of phosphorus resources in China have gradually decreased, and the grade has gradually declined
.
Experts predict that from 2025 to 2030, China's phosphate ore production will fluctuate
around 100 million tons.
If the demand for phosphate ore in phosphate fertilizer and other fields remains stable, and the consumption of phosphate ore for new energy vehicles continues to increase, domestic production alone will not be able to maintain the balance
between supply and demand of phosphorus resources.

At that time, whether phosphate ore will also be imported
.