China’s New Export Controls on Technologies Related to Lithium Battery and Gallium : What’s in Them and How Will They Impact the Market?

A moderate control with long term effects

On January 2, China’s MOFCOM amended the “Catalogue of Technologies Prohibited or Restricted from Export in China”(《中国禁止出口限制出口技术目录》) and publicly solicited comments. This revision removed export bans or restrictions involving “traditional Chinese architectural techniques” and added export controls on certain cathode material production technologies for power batteries, lithium extraction technologies, and gallium extraction technologies.

Unlike the United States, which applies a unified set of export control rules to control both civilian and dual-use technologies, China splits technology export controls into two systems: one system covers military and dual-use technologies, using the Export Control Law as an overarching framework, with specific regulations in areas such as military items, nuclear, and dual-use goods and technologies. Controls are imposed via the “Military Products Export Control List,” “Nuclear Export Control List,” “Dual-Use Items Export Control List,” etc.

The other system, governed by the Foreign Trade Law and the Regulations on Technology Import and Export Administration, targets civilian technologies not covered by export controls in the first system. Under this second system, MOFCOM and the Ministry of Science and Technology publish and update the “Catalogue of Technologies Prohibited or Restricted from Export in China” to impose controls.

If a firm needs to export a restricted technology, it must apply for a license from the provincial-level Department of Commerce. The Department of Commerce will consult with the local Science and Technology Commission to decide whether to approve the application. Only after approval can the exporter conduct substantive negotiations and sign a technology export contract with the importer. After the contract is signed, the exporter then takes the approval document from the local Department of Commerce and applies for a “Technology Export License.” to MOFCOM, which will make a decision within 15 working days of receiving the application. If approved, a Technology Export License is issued, and the contract takes effect as of the date the license is issued.

The specifics of this revision to the Catalogue are below:

I. Under the category “Manufacture of Chemical Raw Materials and Chemical Products,”(化学原料和化学制品制造业) three new cathode material production technologies for batteries (No. 252604X) 电池正极材料制备技术（编号：252604X）are added:

• Lithium Iron Phosphate (LFP) Production Technology(磷酸铁锂制备技术)

• Lithium Manganese Iron Phosphate (LMFP) Production Technology(磷酸锰铁锂制备技术)

• Phosphate Cathode Raw Material Production Technology(磷酸盐正极原材料制备技术)

Their control points are as follows:

1. Battery-use Lithium Iron Phosphate Production Technology simultaneously meeting all the following conditions:

   • Chemical formula LixFeyMzPO₄, where x, y, z ≥ 0, and M is one or more elements other than Li and Fe

   • The material, under a compaction pressure of 300 MPa, has a powder tap (pressed) density ≥ 2.58 g/cc, a 0.1C reversible capacity ≥ 160 mAh/g, and an initial coulombic efficiency ≥ 97%

The above controls target the production processes for lithium iron phosphate and lithium manganese iron phosphate cathode materials, focusing primarily on key parameters such as powder tap density, capacity, average voltage, and coulombic efficiency.

The main control point for lithium iron phosphate production technology concerns high tap density. In the draft for comments, the control standard proposed is under 300 MPa, the powder tap density ≥ 2.58 g/cc, 0.1C reversible capacity ≥ 160 mAh/g, and an initial coulombic efficiency ≥ 97%.

There is little publicly available information on which companies meet these parameters. At present, most power battery manufacturers treat their cathode material formulations, production processes, and battery designs as trade secrets; they do not fully disclose key parameters, nor do they release uniform testing conditions for open comparison. The common claims one hears about “highest energy density” in the market are often marketing angles or based on specific performance dimensions (e.g., volumetric energy density, gravimetric energy density, cycle life).

According to media reports in the industry, in April of last year (2022), lithium-ion battery cathode material giant Changzhou Liyuan New Energy Technology Co., Ltd.(常州锂源) released its newly developed fourth-generation high-density lithium iron phosphate S501, claiming a powder tap density of 2.65 g/cm³.

According to some analysis, based on powder tap density, lithium iron phosphate materials can roughly be split into five generations: the first generation at 2.10–2.30 g/cc (basically phased out); the second generation at 2.40–2.50 g/cc (currently the mainstream product on the market); the third generation at 2.50–2.60 g/cc (growing rapidly, an important material for high-end LFP batteries); the fourth generation at 2.60–2.70 g/cc (just realized mass shipments); and the fifth generation at above 2.70 g/cc (in customer validation, not yet mass-produced). In 2024, mainstream LFP cathode material producers have almost all begun laying out plans for fourth- and fifth-generation products.

From the above generational standards, a control standard of powder tap density ≥ 2.58 g/cc sits at the latter end of the third generation, close to the fourth generation. It corresponds to high-end lithium iron phosphate battery technology characterized by ultrafast charging and high density—currently the latest technology in the market rather than the mainstream.

As for lithium manganese iron phosphate, the control points are a powder tap density ≥ 2.38 g/cc at 300 MPa, a 0.1C initial coulombic efficiency ≥ 90%, a 0.1C reversible capacity ≥ 155 mAh/g, a 0.1C average voltage ≥ 3.85 V, a 1C discharge capacity retention ≥ 97%, and a 2C discharge capacity retention ≥ 95%. Compared to lithium iron phosphate, it includes two additional indicators—average voltage and discharge capacity retention.

These two indicators mainly target key technical points of lithium manganese iron phosphate. The main advantage of LMFP over LFP is its higher working voltage: LFP typically operates between 2.5V and 3.65V, while LMFP can operate around 3.8V to 4.1V, thereby potentially boosting energy density by 15% to 20%. However, LMFP inherently has poorer capacity retention compared to LFP, so improving capacity retention is the major technical barrier in producing this material.

Lithium manganese iron phosphate batteries are a new type of material battery. Currently, only Chery’s Sterra and Huawei’s Luxeed models have adopted such batteries for commercial use, using M3P batteries from CATL that combine ternary and LMFP chemistries. Most other battery companies plan to begin mass shipments of LMFP batteries in 2025. At this point, Chinese companies hold a leading position in this new material. According to the revised Catalogue control requirements, future exports of such material-related production technologies will generally require licenses.

II. In the category of “technologies to be restricted from export,” a new item called “Non-Ferrous Metallurgy Technology” (No. 083201X) 有色金属冶金技术 is added. The control points are:

• Spodumene-to-lithium production of lithium carbonate technology:

  • Preparation of lithium carbonate based on purified lithium solution

  • Carbonization thermal decomposition purification technology

  • Mother-liquor recycling technology

  • Continuous production automatic control technology

  • Lithium hydroxide carbonization technology

• Spodumene-to-lithium production of lithium hydroxide technology:

  • Preparation of lithium hydroxide based on purified lithium solution

  • Sodium extraction via freezing

  • Evaporation crystallization technology

  • Continuous production automatic control technology

  • Pulverizing and drying technology

• Metallic lithium (alloy) and lithium material production technology:

  • Multi-anode electrolysis technology

  • Distillation purification technology for metallic lithium

  • Rolling and processing technology for metallic lithium (alloy) and lithium materials

• Direct extraction of lithium from raw brine:

  • Adsorbent material synthesis technology (aluminum-based, titanium-based, manganese-based)

  • Brine lithium adsorption PID process, integrated adsorption and membrane setups, etc.

• Purified lithium solution preparation technology:

  • Ion exchange impurity removal technology

  • Removal of B, Ca, K, Na, S from lithium-containing solutions

  • Membrane separation and electrodialysis impurity removal technology

All this may appear complicated, but essentially it’s about how to extract lithium resources as efficiently, cleanly, and economically as possible, then process it into various lithium compounds or metallic lithium products required downstream.

Like Lithium, Gallium does not exist in its native state in nature but requires extraction technology to obtain. Lithium generally has two main sources: mineral ores (e.g., the lithium mineral spodumene) and salt lake/underground brine. Whichever the source, the core approach is to separate lithium from lithium-containing raw materials and then purify and transform it into the lithium compounds (e.g., lithium carbonate, lithium hydroxide) required downstream or directly produce metallic lithium.

The extracted lithium solution must undergo impurity removal, concentration, and crystallization to become lithium carbonate or lithium hydroxide. If metallic lithium or lithium alloys are desired, more advanced electrolysis, distillation purification, and mechanical processing technologies are needed. Throughout these processes, automation, mother-liquor recycling, and impurity-removal technologies all aim to enhance product quality, boost production capacity, reduce costs, and minimize environmental impacts. Each technology solves a specific challenge in going “from ore/brine to high-purity lithium products.”

In these fields of technology, Chinese companies do not necessarily have exclusive advantages—rather, their strength mainly lies in efficiency. For example, Ganfeng Lithium’s lithium hydroxide and metallic lithium production techniques are globally competitive. Moreover, Chinese lithium salt enterprises generally prefer transporting lithium concentrates back to China for domestic production, because domestic energy costs and prices of the necessary chemicals are more favorable, and most lithium salt customers are also concentrated in China.

III. Change “Non-Ferrous Metallurgy Technology” (No. 083201X) control point 2 to:

“Technologies and processes to extract metallic gallium from alumina mother liquor by means of ion exchange, resin methods, etc.”

In the previous version of the Catalogue, the relevant control point was described as:

“the ‘dissolution method’ process to recover gallium from the original solution via the seed decomposition mother liquor in alumina production.”

Compared to this “dissolution method,” the newly substituted “ion exchange/resin method” is more straightforward, achieves higher separation efficiency, has broader applicability, and is relatively easier to implement in a continuous operation. It is especially suitable when the mother liquor has a low gallium content and contains many impurities, thus helping to ensure the purity of the gallium.

China’s dominance in critical metals stems not only from resource abundance but also from key smelting and solvent extraction technologies. While these technologies may not be extremely cutting-edge, they enable Chinese companies to extract greater amounts of critical metals at lower cost.

After the changes to the Catalogue, Control Point 2 is a typical “solvent extraction” technology: through chemical separation, the leftover liquid or byproduct mother liquor from alumina refining—although having only a low gallium content but high value—can be used to “pan out” gallium in industrial processes.

According to a 2020 report by the China Geological Survey’s Institute of Mineral Resources, gallium is a rare metal in which China’s reserves rank first worldwide, accounting for about 80% to 85% of global total. Gallium plays a crucial and irreplaceable role in the modern electronics supply chain, particularly for national defense industries. Thanks to its unique properties, gallium serves as a specialized semiconductor material vital for next-generation missile defense and radar systems, electronic warfare, communications, and other advanced capabilities. China essentially monopolizes the global production, mining, smelting, purification, and recycling of gallium and its compounds.

Gallium is primarily associated with bauxite ore. In general, it is only when we chemically process bauxite to refine alumina that we get a small amount of gallium as a byproduct. During alumina extraction, one step in the process yields a “mother liquor” that contains primarily aluminum but also small amounts of gallium. We must find a way to purify gallium from that liquor. Extracting gallium from alumina mother liquor by means of ion exchange, resin methods, and so on is a set of chemical/physical separation processes: the mother liquor containing gallium flows through a specially designed ion-exchange resin or solution system. By leveraging ion exchange or selective adsorption, the gallium ions are adsorbed or displaced, separating them from unwanted components. Then, through elution, concentration, and other steps, high-purity gallium is released from the resin or solution, finally yielding metallic gallium.

On July 3, 2023, MOFCOM and the General Administration of Customs issued Announcement No. 23 of 2023, imposing export controls on gallium- and germanium-related items. Observers widely saw this as a countermeasure against U.S. semiconductor export controls targeting China. Gallium extraction technology is critical to producing enough gallium, and thus directly affects the effectiveness of China’s export controls. In the context of the U.S.-China technology conflict, the deeper meaning behind these measures is not hard to grasp.

By comparison, restricting exports of power battery cathode production technology and lithium extraction technology is more strategic in nature.

China is a major global force in the lithium battery industry and stands at the forefront of worldwide lithium battery R&D, with deep expertise from materials research (cathode, anode, electrolytes, etc.) to manufacturing processes (winding, packaging, etc.). China also has the world’s largest lithium battery manufacturing base and foremost production capacity. According to BloombergNEF, SNE Research, and other research organizations, China accounts for about 70%–75% of global lithium-ion battery capacity. Of the world’s top ten power battery companies, six are Chinese.

Many Chinese battery-related companies are planning to invest in plants in Europe for local production. For example, Changzhou Liyuan’s Phase I phosphate production in Indonesia has already come onstream, with further investments planned. Wanrun New Energy’s subsidiary Wanrun New Energy plans to invest US$168 million in setting up a project in the United States. Hunan Yuneng New Energy intends to build a lithium battery cathode materials plant in Spain. The leader of the power battery sector, CATL, is exploring the U.S. market through technical licensing in cooperation with Ford.

Media reports say the European Union introduced terms in a 1-billion-euro subsidy program for new energy battery development in December of last year, requiring Chinese companies to set up factories in Europe and share technology know-how. Although imposing conditions on government subsidies is routine practice globally, and this requirement by Europe is not exactly a market-access restriction, it has been viewed within China’s public opinion as Europe “robbing” Chinese technology, and the Chinese government has openly opposed it. Bloomberg reported last year that the Chinese government also scrutinized the CATL-Ford partnership to ensure core technology would not flow out of the country.

In the midst of fierce international technological competition, how to let Chinese battery companies go global while preventing the loss of cutting-edge technology and the erosion of generational advantages has likely become a key concern for the Chinese government. It appears this new round of export controls has been in the works for quite some time, with extensive study and discussion.