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The future of electric cars is at the bottom of a Chinese salt lake

Funds pour into remote area to tap lithium deposits for use in vehicle batteries

Lithium recovered from Chaerhan Salt Lake is used to make electric vehicle batteries. (Photo by Yu Nakamura)

GOLMUD, China The world stands on the brink of an electric vehicle revolution. But fueling that revolution will require massive amounts of lithium, the key material in vehicle batteries.

As countries scramble to secure supplies of the valuable metal, China is pouring money and energy into developing its own massive reserves -- the world's second largest after those of Chile.

In late November, this writer visited one of the largest lithium-producing areas in the world: a remote area of China located some 3,000 meters above sea level. From Guangzhou, in the southern province of Guangdong, it takes a full day to reach Golmud, in the inland province of Qinghai. Golmud is located high in the mountains between the Tibet Autonomous Region and the Xinjiang Uighur Autonomous Region, where the air is thin.

"This airport was only completed a little over a month ago. It's brand-new," said an official. It had apparently been built in anticipation of rapid growth in lithium demand. According to one of Golmud's residents, "Huge amounts of capital are flooding into the town."

Leaving the airport in a four-wheel-drive Land Cruiser, we soon saw a vast salt marsh extending as far as the eye could see. "The elevation here is high, but in ancient times all this area was under the sea. Crustal movements lifted it up," the driver said.

WORLD OF SALT It took about an hour and a half to reach Chaerhan Salt Lake, which takes its name from a Mongolian word meaning "world of salt." In the clear, frigid air, the vast lake sparkled in the sunlight. The large volumes of dried salt surrounding it looked like layers of snow.

Chaerhan Salt Lake and the surrounding area contain 83% of China's lithium deposits.

No living things inhabit the lake or its surroundings. But 10-ton trucks loaded with heaps of salt recovered from the lake soon began rumbling by, suddenly bringing the lithium-producing area to life.

After traveling a little farther along a bumpy road made of pressed salt, we met a man named Li Jingwei, 47. He said he had worked for a state-owned company at a plant near the lake since he was 16. "The salt lake provides lots of precious resources. Attention is now on lithium," he said. "Small developers have been driven out, and over the past three years, state-owned enterprises have come in, and investment has grown. This is such a remote place, but many dignitaries come here."

Judging from the photographs hanging on the wall at the plant, this was no exaggeration. The photos included pictures of Chinese Premier Li Keqiang, Wen Jiabao, Zhang Dejiang, Li Changchun, Zhao Leji and other important figures. One even showed Chinese President Xi Jinping encouraging employees during his visit in August last year. "Jiang Zemin also came, though there is no photograph of him here. This is a front-line base for China's resources," Li said proudly.

With a rapid shift from gasoline cars to electric vehicles expected, lithium prices have already soared. On Shanghai's metals market, lithium carbonate is trading at around 170,000 yuan ($25,725) per ton, more than three times the level two years ago.

"The price of lithium has risen, and business is good. We expect even better times," said a factory worker at BYD, China's biggest electric vehicle manufacturer. Realizing that Chaerhan Salt Lake holds the key to electric vehicle growth, BYD moved into the area a year ago, securing a concession for recovering lithium and jointly setting up a factory with a local state-owned enterprise.

In China, electric vehicles account for only about 2% of new car sales. However, the country's electric car market is expected to reach 5 million vehicles by 2025 -- comparable to Japan's entire market for new cars.

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