On February 17, Reuters reported that a Chinese company has ceased exporting a crucial lithium processing equipment called a sorbent, marking a clear indication that manufacturers are following Beijing's proposed restrictions.
Jiangsu Jiuwu Hi-Tech informed customers last month about discontinuing sorbent exports since February 1, according to a reliable source and documents reviewed by Reuters.
Analysts mention that China is the world's leading sorbent producer, critical for lithium extraction from various sources, despite challenges in accurately estimating market size due to limited data transparency from Beijing.
The decision by Jiangsu demonstrates compliance with Beijing's announced plan in January to regulate the export of certain battery and lithium technologies, including sorbents, pending official approval, which would require companies to obtain government licenses for overseas sales.
Negotiations are reportedly underway between Jiangsu, Sunresin New Materials, and the government regarding the proposal, although representatives for these companies have not responded to Reuters' inquiries.
The proposal's potential impact is already noticeable, with a legal expert in the clean energy sector noting that it is creating a "chilling effect" on exporting certain items to unfriendly nations. China's Ministry of Commerce officials have engaged with various companies to discuss the proposal, cautioning against pursuing an ongoing $1 billion export deal.
Moreover, banks are reportedly seeking additional approvals before providing export finance for items potentially affected by the proposal.
While the extent of the restrictions remains uncertain, Beijing's stance underscores its willingness to leverage its dominance in critical minerals like lithium against Washington.
The evolving situation may disrupt Western oil producers' plans to extract lithium, particularly affecting projects reliant on Chinese sorbents.
Various companies, including Exxon Mobil and Koch Industries, are evaluating their options amidst the potential changes in the supply chain due to the proposed export limitations.
Western sorbent producers are considering seizing market opportunities, albeit lacking the extensive experience of their Chinese counterparts.
Notably, industry leaders like Brian Menell of TechMet and Francis Wedin of Vulcan Energy Resources are receiving increased interest from lithium producers seeking alternative sourcing and technology licensing opportunities to navigate the evolving landscape.