Two notable auctions for lithium mines in the southwestern Chinese province of Sichuan have ignited fervent bidding activity, amassing nearly 7,000 bids in total. This dynamic bidding scenario, unfolding throughout the week, has propelled prices to astronomical levels, escalating as of Thursday, as confirmed by an official provincial government source.

Commencing on Thursday, the auction for a five-year exploration right to the Jiada Lithium Mine, situated in Maerkang city, garnered 4,470 bids as of 0855 GMT, as per data from the Sichuan Public Resources Trading Center. Impressively, the highest bid reached a staggering 2.5 billion yuan ($346.81 million), representing an astounding 783-fold increase from the initial starting price of 3.19 million yuan ($442361.29).

Simultaneously, the auction for the five-year exploration rights to the Lijiagoubei Lithium Mine, launched on Wednesday, recorded a substantial 2,414 bids by Thursday afternoon. The bids for this mine surged to 820 million yuan ($113.27), marking an extraordinary upsurge of over 1,400 times from the opening price of 570,000 yuan ($69,250.16) on Wednesday.

The identities of the bidders have remained undisclosed, and the auctions will remain active until a period of ten minutes elapses without any new bids. Both mines are positioned within the Aba region, an autonomous prefecture encompassing Tibetan and Qiang communities in northwestern Sichuan. The mining report issued by the Aba government in January unveiled that this region houses approximately 1.4 million tonnes of lithium.

Zhao Hong, a respected mining analyst from Beijing Sheng Ming Assets Appraisal, shed light on the robust auction interest, attributing it to the strong demand for lithium, the scarcity of domestic resources, and the competitive initial prices. The Chinese Ministry of Natural Resources had previously announced plans to auction these two mines, signaling a shift in the market's landscape. Notably, the past year witnessed a compelling example of this trend, as a 54.3% stake in Yajiang Snowway Mining Development, the owner of a prominent Sichuan lithium mine, was auctioned for 2 billion yuan. This staggering price represented a 600-fold surge compared to the initial starting price and transpired via a platform operated by the e-commerce giant JD.com.

As China maintains its position as the world's largest electric vehicle (EV) manufacturer, the demand for lithium, crucial in EV production, is projected to grow at an average annual rate of 20.4% from 2023 to 2032. Concurrently, lithium mining output is anticipated to rise by approximately 6% annually over the same period. Interestingly, this auction-driven fervor contrasts starkly with the subdued spot market observed this year, where sluggish immediate-term demand and rising supplies have created a downturn. Current spot lithium carbonate prices in China hover around 260,000 yuan ($36,210.44) per tonne, a notable drop from the peak nearing 600,000 yuan ($83,194.68) per tonne observed last November.