(Yicai Global) Oct. 13 -- With local lithium resources attracting investment from various sources, China’s southwestern Sichuan province is encouraging firms in the battery industry chain, including Contemporary Amperex Technology, to settle locally in order to form battery manufacturing hubs.

Sichuan has set up four large clusters, one each in Yibin, Suining, Chengdu and Meishan. Battery giant CATL is the leading company at the Yibin hub. Material supplier Tianqi Lithium is the leader in Suining, with China Lithium Battery Technology and Svolt Energy Technology the stars at the Chengdu base.

Sichuan considers lithium a strategic resource to serve the local real economy, Luo Ling, a member of the Sichuan Provincial Government Decision-making Advisory Committee, told Yicai Global.

Investment agreements with battery giants transform the local resource advantage into superiority in developing the whole industrial chain of new energy vehicles, according to Luo, who is also president of the Sichuan Industrial Economic Research Institute.

He suggested that in the future, the granting of new mining rights will definitely be carried out through public auctions, but a relatively high industrial threshold will be set in order to guide the resource advantage to promote the development of local manufacturing.

For example, Sichuan has relied on the resource advantage to attract Ningde-based CATL to increase investment in the area, Luo pointed out, adding that cooperation with the local government has helped the company enter the upstream lithium mining industry.

CATL has signed agreements with Yibin since 2019 to invest in the construction of the first to sixth phases of power battery projects in the city, with investment totaling about CNY30 billion (USD4.2 billion). The battery giant announced in late 2021 that it would continue to invest CNY24 billion to build phases seven to 10 in Yibin.

As the province with the richest lithium resources in China, Sichuan’s reserves of the metal account for 57 percent of the country’s total, with ore reserves with mining rights reaching 158 million tons, according to official data released in June.

The province is trying to reach a lithium mining capacity of 5 million tons a year by 2025.

Sichuan’s lithium resources are mainly located in Ganzi Tibetan Autonomous Prefecture, and Aba Tibetan and Qiang Autonomous Prefecture in the west of the province. The local government has issued mining rights to six mines so far.

Editors: Tang Shihua, Peter Thomas