[Bulk Commodities] Salt Lake Co. is finally almost done filling in the hole!
Potash is a classic oligopoly. Global potash resources are mostly in the hands of Canada, Russia, and Belarus, and exports are highly concentrated among a few players — Canada's Nutrien, Mosaic, Uralkali, and Belaruskali — who coordinate their shipping pace year after year. The company's annual report puts it plainly: global potash is in a phase where top suppliers exert strong control over supply, and pricing strategy is mainly price-first. In other words, a few giants agree on how to sell, so prices are easy to raise and hard to push down. In the first half of this year, the big contract Belaruskali signed with India was priced at $383 a ton, up $34 year on year, which put a floor under global potash prices. Domestic potassium chloride prices have also stayed high at around 3,100–3,200 yuan a ton.
Demand is solid too. We use over ten million tons of potash a year and are the world's largest potash consumer, but domestic capacity is only a bit over 5 million tons — the rest is all imported. In the first half of this year alone, we imported 8.8 million tons of potassium chloride, up 27.55% year on year, with import dependence at 78.54%. Something tied to food security that's nearly 80% reliant on imports — that's exactly where Salt Lake Co.'s value in securing supply comes in. The company's half-year report specifically notes that it earnestly fulfills its duty as a central SOE to stabilize prices and secure supply, playing the role of a ballast stone. The weight of that line is this: the 5-million-plus tons of domestic capacity isn't just there to make money — it's also the country's bargaining chip when negotiating with international potash giants. Only when they know you have goods on hand do they dare not push prices up too absurdly. So potash prices will fluctuate, but the floor is very hard.
Lithium is the exact opposite — a fully market-driven cyclical industry. Lithium carbonate fell from 600,000 yuan a ton in 2022 all the way to under 100,000 by the end of 2024, flattening the whole industry, and lithium miners were generally struggling on the edge of losses in 2025. Then this year lithium carbonate has been volatile, rising from 117,000 at the start of the year to 200,000 in May; in Q2 Zimbabwe's ban on lithium concentrate exports tightened supply expectations, and the first-half midpoint was around 140,000. The core driver of this year's rally is energy storage — institutions forecast global energy storage battery shipments of about 925GWh this year, corresponding to 590,000 tons of lithium demand, up over 60% year on year, creating a tight balance in lithium resources.
For Salt Lake Co., the biggest advantage is having the lowest cost — cash cost is roughly 30,000–40,000 yuan a ton, versus 50,000–70,000 for spodumene-based lithium and even higher for lepidolite. Back when lithium carbonate prices were low, ore-based lithium producers were losing money across the board, yet Salt Lake's lithium business still had a 52% gross margin. In the first half of this year, with lithium back at 140,000, its gross margin hit 83.46%. That's the value of the cost curve: in a downturn, the lowest-cost players survive to the end; in an upturn, the lowest-cost players earn the most.
Others can only look on enviously at Salt Lake's low-cost lithium extraction — they really can't copy it, because you need the gift of an actual salt lake plus complete infrastructure. Qarhan, for instance, is the result of more than sixty years of accumulation: salt pans, dikes, railways, water and power, roads — the full set of infrastructure is already built on the high-altitude Gobi desert. Among peers, Zangge Mining sits right next door in Qarhan with similar conditions but at a smaller scale; it's been talking about expanding at Zabuye for years, yet output is still ramping up.
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