A worker at a pond for collecting lithium in a salt mound in Bolivia, where CITIC Guoan Group has signed an agreement to explore for the mineral.[Photo/China Daily]

BEIJING - CITIC Guoan Group, a comprehensive conglomerate engaging in industrial investment and economic development, signed a strategic cooperative agreement with Bolivia to jointly explore lithium resources in Bolivia's Coupasa salt flats, CITIC's listed arm CITIC Guoan Information Industry Co Ltd said on Sunday evening.

If the lithium deposit meets minimum expectations, CITIC will submit a proposal to establish a joint venture for extraction, the company said in the statement.

Demand for lithium carbonate, a key ingredient in batteries, is expected to rise sharply in the future as countries increase support for electric cars.

Companies from South Korea, France, Japan and China are competing for lithium resources in Bolivia, which is considered to have one of the world's largest confirmed reserves.

CITIC Guoan's operations in Qinghai province reported lower output in the first half of this year as a result of flooding, the company said in a statement.

Qinghai has the largest reserves of lithium in China and accounts for nearly 90 percent of the national output.

CITIC Guoan and Qinghai Lithium Co are the two largest lithium producers in the province with around 30,000 tons of annual capacity, according to the local land and resources bureau.

Industry experts said lithium resources in Qinghai are of low concentration and cost more to extract than those in Australia and Canada.

The Australia-based Galaxy Resources Ltd, aiming to capitalize on future global demand, began construction in 2009 of a lithium carbonate processing facility in Zhangjiagang, a port city near Shanghai. The processing facility will receive lithium shipped from Australia.

Anthony Tse, executive director of Galaxy, told China Daily earlier that the facility will begin production in the second half of this year.

Prices of lithium carbonate were about 33,000 yuan ($5,163) a ton on Aug 5, slightly lower than the January price of 35,000 yuan a ton, according to data from Shanghai Metals Market website, an information service provider of China's nonferrous metal markets.

Although a report by China International Capital Corp predicted prices are likely to increase by 16 percent annually by 2013 because of rising demand for lithium batteries, some industry analysts are not as optimistic.

According to Wei Chishan, an analyst with Shanghai Metals Market, demand for electric cars greatly affects the price of lithium carbonate, which is a main component of electric vehicle batteries.

The nation outlined plans in 2010 to boost the number of electric cars on its roads from 9,800 vehicles to 500,000 by 2015. Other countries such as the United States plan to have at least 1 million electric cars on the road by 2015.

However, Wei said the well-publicized policy has yet to show concrete steps toward implementation.

China recently surpassed Japan as the world's largest provider of lithium batteries. It also has about one-tenth of the estimated global lithium reserve and is the world's third-largest producer of the metal.