Asia's largest lithium mine production soars by 175%, Rongjie Co. faces ongoing bottlenecks in "big mine, small choice" dilemma

Why Has Rongjie Co., Ltd.'s Ore Dressing Expansion Project Not Started Yet?

21st Century Business Herald Reporter Dong Peng

The bottleneck in Rongjie Co., Ltd.'s ore dressing capacity will be broken through by “outsourcing ore dressing” in 2025.

On the evening of March 23, Rongjie Co., Ltd. released its annual report, stating that the company’s production of lithium concentrate (6% grade) reached 185,600 tons, an increase of 174.83% compared to the same period last year.

“The main product, lithium concentrate output, achieved a breakthrough through the outsourcing of raw ore, driving a significant increase in the company’s operating income,” noted Rongjie Co., Ltd.

The company’s lithium concentrate products originate from the No. 134 vein in the Mijika mining area in western Sichuan, which is the largest hard rock lithium mine currently in production in Asia as of 2025.

In December 2024, Rongjie Co., Ltd.'s subsidiary Rongda Lithium Industry signed a “Raw Ore Outsourcing Cooperation Agreement” with the government of Kangding City, Ganzi Prefecture, stipulating that the company could outsource a certain quantity of raw ore for ore dressing, which subsequently led to a significant increase in lithium concentrate output.

However, because the aforementioned “outsourcing ore dressing” agreement is only valid for two years, it can only serve as a temporary solution, while a fundamental solution requires the mutual matching of mining and dressing capacities.

That is, the dressing capacity needs to be further increased based on the 1.05 million tons/year mining capacity and 450,000 tons/year dressing capacity of the No. 134 vein.

The agreement signed with the Kangding City government also clearly states that Rongda Lithium Industry will carry out a capacity expansion project for ore dressing at the mine site, with an expansion scale of an additional 350,000 tons/year dressing capacity, but this expansion project has not yet started construction.

Mijika is the largest petalite-type spodumene mining cluster in Asia, which specifically includes multiple individual mines such as the No. 134 vein, the Muroong lithium mine, and the Dangba lithium mine.

The No. 134 vein belonging to Rongjie Co., Ltd. is the largest project in production among them, but this project has historically experienced long periods of suspension due to its location in a high-altitude area with a fragile ecological environment.

It was not until 2019 that Rongda Lithium Industry successfully passed government inspections after renovating its tailings pond, seepage dam, and water recovery facilities, officially resuming production in June 2019.

In the early stages of resumption, production at the No. 134 vein was primarily focused on recovery, with very little output. Historical data shows that in 2019, the company’s lithium concentrate output was only 27,300 tons, recovering to 58,400 tons the following year.

After 2023, as production gradually returned to normal, the company’s overall output also encountered bottlenecks, maintaining around 65,000 tons of lithium concentrate for two consecutive years, with growth rates significantly down from the early recovery period.

The key issue lies in the clear ceiling in the company’s ore dressing segment. The mining capacity of the No. 134 vein is 1.05 million tons/year, while the dressing capacity is only 450,000 tons/year.

“The average grade of the company’s lithium ore is 1.42%, and about 5-6 tons of raw ore can produce 1 ton of 6% grade lithium concentrate…” Rongjie Co., Ltd. previously responded to investors.

Based on this ratio, the 450,000 tons/year dressing capacity can produce at most 90,000 tons of lithium concentrate, and the official output given by Rongda Lithium Industry at full capacity is only about 70,000 to 80,000 tons, essentially locking the company’s output due to the “large mine, small dressing” situation.

In fact, shortly after resuming production in 2019, Rongjie Co., Ltd. began seeking to expand its dressing capacity and announced a 2.5 million tons/year Yuantangba lithium mining selection project the following year.

In March 2023, the Ganzi Prefecture Ecological Environment Bureau issued a “Review Opinion Letter” stating, “Considering that the planned leading industries of the Yuantangba Green Lithium Industry Base do not comply with the standards of laws and regulations such as the ‘Yangtze River Protection Law of the People’s Republic of China’… it is recommended to cancel the lithium mining selection and tailings processing industries at this base and optimize and adjust the industry positioning.”

The Yuantangba ore dressing project could not obtain approval, and Rongjie Co., Ltd. proposed another solution in 2024. In December of the same year, Rongda Lithium Industry signed a “Raw Ore Outsourcing Cooperation Agreement” with the Kangding City government of Ganzi Prefecture.

The agreement stipulates that within two years after its effectiveness, Rongda Lithium Industry can outsource the raw ore mined from the mine for ore dressing, with the amount of raw ore transported each year not exceeding the agreed quantity; Rongda Lithium Industry will carry out the capacity expansion project for ore dressing at the mine site, with an expansion scale of an additional 350,000 tons/year dressing capacity.

“With outsourcing ore dressing,” the lithium concentrate output of Rongjie Co., Ltd. is expected to rise rapidly to 185,600 tons from the previous peak of 67,500 tons in 2025, reaching the theoretical maximum output range of the aforementioned 1.05 million tons of mining capacity.

“Due to the significant increase in the company’s lithium resource output, it ensured that the joint venture lithium salt plant (Chengdu Rongjie) reached full production of lithium salt,” noted Rongjie Co., Ltd.

However, one year after the signing of the outsourcing agreement, the more fundamental solution, the 350,000 tons/year dressing capacity expansion project, has not yet started construction as of the end of the reporting period.

The 2026 specific business plan provided in Rongjie Co., Ltd.'s annual report also includes continuing to promote the implementation of the new 350,000 tons/year dressing capacity project at the mine site, as well as the site selection for the remaining capacity expansion of the 2.5 million tons/year dressing capacity.

If there is still no clear progress in the future, the company may continue to ensure its lithium concentrate production by renewing the “outsourcing agreement,” provided that there are no objections from the local government or Rongjie Co., Ltd.

Although western Sichuan is a concentration area for lithium resources, there are not many projects in production. Including the No. 134 vein of Mijika, there are only a few projects in production such as the Lijiagou lithium mine (owned by Chuaneng Power) and the Yelonggou lithium mine (under Shengxin Lithium Energy).

Among them, the scale of the Yelonggou lithium mine is relatively small, while the production capacity of the Lijiagou lithium mine is basically comparable to that of the No. 134 vein, with a designed annual mining and dressing capacity of 1.05 million tons, producing about 180,000 tons of lithium concentrate annually.

Historical data shows that in the first half of 2025, Chuaneng Power mined 346,600 tons of raw ore, sold 76,600 tons of raw ore, and sold 48,600 tons of lithium concentrate, a substantial increase compared to the same period last year.

As of now, although Chuaneng Power has not yet disclosed its annual report, the overall output for 2025 is not yet known, but the Lijiagou lithium mine project has essentially reached its designed production capacity by the end of August 2025.

This means that during the complete year of 2026, the output of the No. 134 vein and the Lijiagou lithium mine, both with similar mining capacities, is expected to reach around 180,000 tons.

And this is just the beginning. Further inventory of other listed companies’ reserve projects suggests that western Sichuan’s lithium mines may see a larger scale of production expansion starting in 2027.

For example, Shengxin Lithium Energy has repeatedly increased its investment in the Muroong lithium mine, which not only has more lithium oxide reserves but also has planned production capacity and potential output that exceed those of Rongjie Co., Ltd.'s No. 134 vein.

According to the mining license and related review reports issued by the Ministry of Natural Resources in 2024, the Muroong lithium mine has confirmed lithium oxide (Li₂O) resources of approximately 989,600 tons, with an average grade of 1.62%, recognized as the largest hard rock single lithium mine confirmed in Asia to date.

In response, Shengxin Lithium Energy recently stated that the preparatory work for the construction of the Muroong lithium mine has been basically completed, and large-scale construction is about to begin.

Its planned production capacity is set to reach 3 million tons/year, far exceeding the already operational western Sichuan lithium mines mentioned above.

In addition, the Dangba lithium mine, with a mining license scale of 1 million tons/year (exploration rights belong to Guocheng Mining’s affiliated company Jinxin Mining), is also pushing for its capacity expansion.

“In 2025, Jinxin Mining’s raw ore mining volume reached 577,000 tons, and the future mining capacity scale is expected to expand further to 5 million tons/year,” Guocheng Mining’s annual report stated.

According to the company’s annual report, the application work for the aforementioned 5 million tons/year mining license has completed the important preliminary procedures required for the application of the mining license, including passing the reserve report review and expert review of the development plan.

Against this background, Rongjie Co., Ltd.'s lithium concentrate output is likely to remain leading this year, but as the Muroong lithium mine is completed and put into production, and the Dangba lithium mine expands production, the largest operational hard rock lithium mine in Asia is likely to change hands.