New Lithium Sources Emerging Outside the Lithium Triangle 

Battery Metals

Rising demand for lithium from the China-dominated EV battery market has manufacturers looking for new sources of supply. 

While the lithium triangle garners the majority of the industry’s attention, lithium sources are emerging around the world to serve the growing electric vehicle market.

The primary sources of the world’s lithium supply are hard rock and brine deposits, and the majority of the world’s lithium originates in the salty salars of the arid landscape of South America’s Lithium Triangle. Rising demand for electric vehicles (EVs) and lithium-ion batteries, especially in China, could translate into rising demand for new sources of battery-grade lithium. To make the most of this opportunity, lithium exploration companies are searching for new sources in emerging lithium districts such as Mongolia’s Gobi Desert.

EVs, China and the global lithium market

After reaching US$17.4 billion in 2019, the global EV lithium-ion battery market is expected to reach US$95.3 billion by 2030. China has set its sights on dominating that market growth. The Asian nation already accounts for more than half of global lithium chemical production and more than two-thirds of the world’s lithium-ion battery production. According to Metal Bulletin, “Growth in Chinese lithium compound production and the rising number of companies able to supply good quality lithium both domestically and overseas have been a major factor in transforming lithium into a commodity as well as a specialty chemical product.”

China’s battery manufacturing capacity is expected to grow by more than 2.5 times by 2026, according to Wood Mackenzie Energy Storage Analyst Mitalee Gupta. “Not only has the country seen a slew of investments in battery facilities, but over the past couple of years several Chinese battery vendors have begun emerging into battery giants, joining the likes of Tier I South Korean and Japanese vendors,” Gupta said to GTM.

There has also been a marked increase in strategic investment and supply deals for companies seeking to strengthen their position in the global lithium market, such as Ganfeng Lithium (SZSE:002460). The Chinese lithium producer signed a two year deal with Tesla (NASDAQ:TSLA) that can be extended by three years, finalized a deal with BMW (ETR:BMW) to supply the German automaker’s lithium needs for five years and signed a deal with Korean battery maker LG Chem (KRX:051910) to nearly double its battery materials supplies over the next six years.

“This escalation in downstream interest shows that lithium supply remains a key concern throughout the battery supply chain,” said Benchmark Mineral Intelligence Senior Analyst Andrew Miller.

Battery manufacturers know the key to growing the market further requires keeping material costs low. This need is expected to prompt further investment in not only mine expansions but also new sources of low-cost lithium production.

Lithium brine sources offer low-cost, environmentally friendly lithium production

Lithium in hard rock deposits, also known as pegmatite deposits, are most commonly hosted in the mineral spodumene and account for one-quarter of global lithium production. Australia is one of the biggest producers of lithium from hard rock. Brine deposits account for 66 percent of the world’s lithium reserves, occurring in continental saline desert basins known as salars — salt flats associated with areas of geothermal activity and accumulations of saline groundwater with a high concentration of dissolved lithium leached from the surrounding rock. The time-to-market and economic contrasts involved in hard rock vs. lithium brine extraction is a common topic in the industry. Lithium brine extraction has proven to be 50 percent cheaper in terms of exploration capital and operating expenses for a variety of reasons, including logistics, topography and climate. Brine extraction also has a much lower carbon footprint than hard rock mining as it targets elements that are already in a solution and does not require a mine, ore processing, tailings pond nor extensive logistics. Some of the world’s most profitable lithium mining operations are from brine deposits such as the salars of Chile in the Lithium Triangle.

Lithium sources beyond the Lithium Triangle

Sharing a border with China to the south, the salt-bearing salars of Mongolia have shown potential for lithium mineralization. With 250 days of sunshine per year, Mongolia’s rangelands and arid climate both help to facilitate high evaporation rates. “The geology of southeast Mongolia mirrors that of the Lithium Triangle of South America. Like the Lithium Triangle, the region is an endorheic basin contained within a high evaporation and low precipitation zone and no outflow to external bodies of water,” Matthew Wood, chairman of battery metal exploration company ION Energy, told the Investing News Network.

ION Energy holds one of the largest mining licenses in Mongolia. The company’s Baavhai-Uul project covers more than 80,000 hectares in the Gobi desert about 200 kilometers from the Chinese border. Early exploration work on the property has outlined both lithium brine as well as spodumene targets with grades averaging 426 parts per million lithium and as high as 811 parts per million with low potassium and magnesium ratios. Unlike projects in the lithium triangle that must ship their product around the world to access major markets, the Baavhai-Uul project’s proximity to China offers easy access to the world’s largest EV market.

Mongolia is considered one of the last frontiers for mineral exploration and mining. The World Bank considers Mongolia to be a stable growth economy, with the country’s GDP reaching US$13.01 billion in 2018 with a growth rate of approximately 6 percent. The Mongolian government recently showed its support for the mining sector with the signing of the Foreign Investment Promotion and Protection Agreement (FIPA) with Canada in 2017. The agreement established a legal framework that offers greater certainty for Canadian investors. When considering Mongolia’s proximity to major markets like China, the country appears uniquely positioned to provide lithium for the growing EV market.


Technological advancements in lithium-ion batteries are making the EV a viable alternative to the conventional internal combustion engine. To further solidify the transition from fossil fuel dependency to an electric future, global leaders in EV and battery manufacturing such as China are already looking to secure new sources of battery-grade lithium. Mongolia’s geological potential, ideal climate and close proximity to Asian markets offers one potential solution.

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