China May Be Sitting on Untapped Lithium Reserves Under Its Factories

Researchers from the Chinese Academy of Sciences identified potential lithium mineralization in volcanic rock layers that overlap geographically with the country’s primary battery manufacturing hubs. Duan Zheng, a lead researcher on the project, noted that localizing extraction could slash transport costs and mitigate supply-chain risks. While China currently controls up to 80% of global lithium processing, it remains the world’s second-largest producer behind Australia, forcing a heavy dependence on foreign raw materials.

However, the commercial path forward remains uncertain. The concentration of lithium in these clay formations—ranging from a few hundred to 1,000 parts per million—is relatively low by industry standards. Development also faces the hurdle of domestic overcapacity, a consequence of decade-long government subsidies that fueled aggressive expansion across the solar, wind, and EV sectors. Beijing has recently begun cooling investment in these industries to stabilize the market.

Despite these challenges, China is pivoting toward the next generation of energy storage. The Ministry of Industry and Information Technology recently signaled an aggressive push to dominate solid-state battery technology within five years. Whether the nation chooses to exploit these newly identified domestic clay deposits or focuses entirely on technological leaps remains to be seen, but the discovery highlights a strategic effort to insulate the country’s industrial core from geopolitical volatility.