Exploring the Value Transmission Chain Between Upstream Resources and End-Markets
Introduction: A Battery’s Connection
When you see that small e-cigarette in a consumer’s hand on the streets of the EU, you probably wouldn’t imagine that the lithium battery powering it might be made from raw materials sourced from salt lakes in the South American highlands, hard rock mines in Western Australia, or lithium concentrate from Sichuan. This is precisely the unique charm of mining investment in the 21st century: a clearly visible and data-traceable value chain exists between upstream lithium mines and downstream consumer electronics.
In 2024, global lithium demand grew by nearly 30% year-on-year (IEA data), far exceeding the average annual growth rate of 10% in the 2010s. Meanwhile, the European e-cigarette market is projected to reach $10.527 billion in 2025. These two seemingly distant markets are actually closely linked. This article will delve into the operational logic of this supply chain, revealing the opportunities hidden within for mining investors.
Chapter 1: Supply Chain Overview – From Salt Lakes to Your Palm
1.1 Upstream Mining: The Three Major Lithium Triangles
Global lithium resources are mainly concentrated in three “lithium triangle” regions:
South American Salt Lake Triangle (Chile, Argentina, Bolivia)
Possesses approximately 60% of the world’s lithium reserves
SQM (Chilean Chemical & Minerals) is the dominant player here, with lithium business revenue exceeding US$4.5 billion in 2024
Lowest cost of lithium extraction from salt lakes, with cash costs of approximately US$4,000-6,000 per ton
Western Australian Hard Rock Triangle
The world’s largest spodumene concentrate producing region
Tianqi Lithium’s Greenbushes mine is the world’s largest spodumene mine, producing over 1.5 million tons of concentrate annually
Higher cost of lithium extraction from ore, but stable output quality
China Processing Triangle
Dominated by giants such as Tianqi Lithium and Ganfeng Lithium
In 2024, Tianqi Lithium recorded a net loss of 7.9 billion yuan due to the decline in lithium prices, but still maintained strong processing capabilities.
1.2 Midstream Processing: From Lithium Compounds to Batteries
Lithium ore or brine is processed into three main products:
Lithium Carbonate: Primarily used in lithium iron phosphate (LFP) batteries
Lithium Hydroxide: Primarily used in high-nickel ternary batteries
Lithium Metal: For special applications
Key Data: In 2025, the price of lithium-ion battery packs dropped to $108/kWh (BloombergNEF), an 8% decrease compared to 2024. Despite rising battery metal prices, battery pack prices continued to decline, thanks to economies of scale in manufacturing and the increased proportion of LFP batteries.
1.3 Downstream Applications: E-cigarettes are Just the Tip of the Iceberg
The downstream applications of lithium batteries can be divided into three main segments:
Electric Vehicles: Accounting for over 70% of lithium demand
Energy Storage Systems (ESS): The fastest-growing sector, with demand surging in 2024
Consumer Electronics: Including e-cigarettes, smartphones, laptops, etc.
Special Focus: E-cigarette Market
According to data from Market Research Community, the disposable e-cigarette battery market is projected to expand at a CAGR of 15.5% by 2032. InsightAce Analytics predicts that the disposable e-cigarette battery market will reach $16.24 billion in 2024 and $94.64 billion by 2034, representing a CAGR of 19.40%.
Regarding the European market:
2025 European e-cigarette market size: US$10.527 billion (MMR Statistics)
2024-2033 CAGR: 17.4% (IMARC Group)
The UK is currently the largest market in Europe
Chapter 2: The Hidden Link Between Lithium Prices and the Vape Market
2.1 The Lithium Price Rollercoaster: A Review of 2024-2025
2024 was a difficult year for lithium producers. Lithium prices remained under pressure due to large-scale capacity expansion in China, Indonesia, and the Democratic Republic of Congo. However, this trend began to reverse in the second half of 2025:
Price Trends:
Lithium prices fell to a cyclical low in 2024, resulting in losses for most producers.
In the second half of 2025, lithium prices began to rebound, and SQM profits recovered accordingly.
Analysts predict that lithium prices may reach $28,000/ton (Carbon Credits) in 2026.
Driving Factors:
Supply risks at some lithium mines in China
New cobalt export regulations in the Democratic Republic of Congo
Surge in demand for Battery Energy Storage Systems (BESS)
Increased geopolitical risks
2.2 The Proportion of Lithium Battery Costs in E-cigarettes
A typical rechargeable e-cigarette includes:
Battery Module: Approximately 15-25% of BOM cost
Control Chip: 10-15%
Atomizer: 20-30%
Structural Components: 15-20%
Other: Remaining portion
For disposable e-cigarettes, battery costs account for a higher percentage because they cannot be amortized through reuse. This is why lithium price fluctuations directly impact e-cigarette manufacturers’ profit margins.
2.3 Demand Transmission Mechanism
When lithium prices fall:
Battery pack prices decrease (albeit with a lag)
E-cigarette manufacturers’ costs decrease
Retail prices become more competitive
End-user demand increases
The reverse is also true. This transmission mechanism, while not immediate, is very evident over a 6-12 month period.
Chapter 3: A Perspective from the Mining Giants—Who Will Win?
3.1 Albemarle – The Lithium King of the US
Financial Performance in 2024-2025:
Q4 2024 Revenue: $1.2 billion, Net Loss: $75 million
Q2 2025 Unexpected Profitability, Adjusted EPS of $0.11, Far Exceeding Analyst’s Expected Loss of $0.82
Q4 2025 Revenue: $1.4 Billion, Up 16% Year-over-Year
Strategic Advantages:
One of the world’s largest lithium producers
Core asset at the Atacama Salt Flat in Chile
50% stake in the Greenbushes mine in Western Australia
Strong customer base (Tesla, Ford, etc.)
Investment Highlights: Albemarle achieved a remarkable profit turnaround in 2025, demonstrating improved operational efficiency. The company’s stock price is highly correlated with lithium prices, making it an ideal target for betting on a lithium price rebound.
3.2 SQM (Chilean Chemicals & Mining) – King of the Salt Lakes
2024 Financial Data:
Full-year revenue: US$4.529 billion (US$7.468 billion in 2023)
Net loss: US$404 million (net profit of US$2.013 billion in 2023)
Record high sales of lithium and iodine
Strategic Advantages:
One of the world’s lowest-cost lithium producers
Exclusive mining rights to the Atacama Salt Lake in Chile
Commencement of sales of spodumene concentrate from the international lithium division in 2024
Significantly improved quarterly profits in 2025 due to a rebound in lithium prices
Investment Highlights: SQM’s cost advantage allows it to remain competitive even during periods of low lithium prices. As lithium prices recover, its profit margins will expand rapidly. Furthermore, the company’s strong iodine business provides additional revenue diversification.
3.3 Tianqi Lithium – One of China’s Two Lithium Giants
2024 Financial Performance:
Net Loss: RMB 7.905 billion (approximately US$1.1 billion)
This is the company’s largest annual loss since its listing.
Net Profit in 2023: RMB 7.297 billion
Reasons for the Loss:
Sharp decline in lithium product prices
Mismatch in pricing mechanisms (different pricing cycles for procurement and sales)
Decline in investment income from the associated company SQM
Increase in asset impairment losses
Foreign exchange losses
Strategic Adjustments:
Suspension of expansion of the Kemerton smelter in Western Australia (RMB 1.4 billion already invested)
Downgrade of capacity expansion plans
Focus on cost control and operational efficiency
Investment Highlights: Despite the dismal performance in 2024, Tianqi Lithium still owns a 26% stake in Greenbushes, the world’s largest hard-rock lithium mine (through an IGO joint venture) and complete processing capabilities. Its performance is highly resilient once lithium prices stabilize and recover.
3.4 Comparison of Three Major Companies
Company2024 PerformanceCost AdvantageResource ReservesInvestment RatingAlbemarleUnexpected Profit in Q2★★★★★★★★BuySQMNet Loss but Record Sales★★★★★★★★★★Strong BuyTianqi LithiumHuge Loss★★★★★★★Hold/Buy on Dips
Chapter Four: End-Market Case Study – Supply Chain Insights from AgoraVape
4.1 Who is AgoraVape?
AgoraVape is a leading e-cigarette wholesaler in the EU, headquartered in the Netherlands, with operations covering major markets such as Germany, France, and the UK. As a key link between manufacturers and retailers, AgoraVape’s business model provides an excellent example for understanding end-market demand.
Business Characteristics:
Annual transaction volume exceeding 5 million e-cigarette devices
Representing over 30 brands, covering all categories including disposable, rechargeable, and refillable cartridges
Customer network including over 2,000 retail stores in Europe
35% year-on-year revenue growth in 2024, far exceeding the industry average
4.2 AgoraVape from a Supply Chain Perspective
From a mining investor’s perspective, what does a wholesaler like AgoraVape represent?
Demand Signals:
Disposable e-cigarettes still account for 60% of sales, but rechargeable devices are growing faster (+45% YoY).
Demand for high-capacity (800+ puffs) disposable e-cigarettes is surging, meaning larger battery usage.
Strong demand in the German market for products compliant with TPD regulations is forcing manufacturers to improve battery safety.
Cost Sensitivity: AgoraVave’s procurement data shows that when lithium battery costs decrease by 10%, its price competitiveness in retail channels improves by approximately 5-7%, and sales volume increases by approximately 15%. This validates the price pass-through mechanism mentioned earlier.
4.3 Implications for Upstream Companies
The AgoraVape case tells us:
Accelerated Product Iteration: The battery capacity of disposable e-cigarettes has increased from 300mAh in the early days to 650mAh or even higher now, increasing the amount of lithium used per unit.
Rising Compliance Costs: Stricter EU requirements for battery recycling and restrictions on hazardous substances are driving manufacturers to adopt higher-quality lithium batteries.
Channel Centralization: Large wholesalers like AgoraVape have increased bargaining power, enabling them to more quickly sense market conditions and relay them to upstream suppliers.
Chapter Five: Investment Opportunities and Strategies
5.1 The Current Market Window
Why is now a good time to focus on lithium mining investment? **
Price Bottom Out: The low prices of 2024 have led to the exit of a large amount of high-cost production capacity, and a supply-demand rebalancing is underway.
Strong Demand: The IEA predicts that lithium demand will increase 6-8 times by 2030.
Policy Support: Both the US Inflation Reduction Act and the EU Critical Raw Materials Act list lithium as a strategic resource.
Valuation Attractiveness: Major lithium mining stocks have corrected by 60-80% from their 2022 highs.
5.2 Three Investment Strategies
Strategy 1: Industry Leader Allocation
Targets: Albemarle, SQM
Logic: Cost Advantage + Economies of Scale + Customer Loyalty
Suitable for: Conservative Investors
Strategy 2: Turnaround Strategies
Targets: Tianqi Lithium, Ganfeng Lithium
Logic: Extremely pessimistic expectations have been priced in; a rebound in lithium prices brings high elasticity.
Suitable for: Aggressive Investors
Risks: High debt ratio, geopolitical risks
Strategy 3: Supply Chain Arbitrage
Targets: Battery manufacturers (e.g., CATL), equipment suppliers
Logic: Benefiting from the cost advantage brought by falling lithium prices
Suitable for: Industry trend investors
5.3 Key Indicators to Watch
Lithium Price Indicators:
Asian Metal lithium carbonate price
Fastmarkets lithium hydroxide quotes
SQM and Albemarle contract price guidance
Demand Indicators:
Global electric vehicle sales
Battery storage installed capacity
E-cigarette and consumer electronics shipments
Supply Indicators:
Australian mine shipments
South American salt lake production
China’s lithium salt capacity utilization rate
Chapter Six: Risk and Compliance Statement
6.1 Investment Risk Warning
Market Risks:
Lithium prices are extremely volatile, with the largest drop exceeding 80% in the past two years. Mining stocks are highly correlated with commodity prices and may experience significant pullbacks.
Policy Risks:
Reduction in electric vehicle subsidies may suppress demand.
Trade protectionism (e.g., US tariffs on Chinese lithium battery products).
Nationalism in resource-rich countries (the tendency of countries like Chile and Bolivia to nationalize lithium resources).
Technology Risks:
Alternative technologies such as sodium-ion batteries may impact lithium battery demand.
Solid-state battery technology may change the demand structure for lithium.
Company-Specific Risks:
Tianqi Lithium’s high debt ratio and foreign exchange exposure.
SQM’s governance structure issues.
Albemarle’s exchange rate risk.
6.2 Industry Risk Warnings
E-cigarette Industry:
Stricter EU TPD regulations, limiting nicotine concentration and cartridge capacity.
Ban on disposable e-cigarettes (already implemented or under consideration in some countries).
Flavor restrictions (bans on fruit flavors, etc.).
ESG Risks:
Impact of lithium extraction from salt lakes on water resources.
Ecological damage from hard rock mining. Labor Issues in Cobalt Mines in the Democratic Republic of Congo
6.3 Disclaimer
This article is for informational purposes only and does not constitute investment advice. Mining and stock investments carry high risks and may result in loss of principal. Investors should consult a professional financial advisor before making any investment decisions.
Ask questions and fully understand the relevant risks. The data and cases cited in this article are all from publicly available information, and the author assumes no responsibility for their accuracy or completeness.
Conclusion: Grasping the Intersection of Mining and Technology
From the brine of South American salt lakes to the spodumene of Western Australia, and then to the boxes of e-cigarettes in AgoraVape’s warehouse soon to be shipped across Europe—this is a value creation chain spanning several years. For mining investors, understanding the operational logic of this chain means being able to more accurately grasp the timing of entry.
Key Takeaways Recap:
Structural Growth in Lithium Demand: Driven by electric vehicles, energy storage, and consumer electronics, lithium demand will maintain high growth over the next decade.
Price Cycle Shifting: The industry downturn in 2024 may be the starting point of a new cycle.
Cost is the Lifeline: During industry downturns, companies with cost advantages, such as SQM and Albemarle, are more likely to survive.
The End-Market Cannot Be Ignored: While consumer electronics such as e-cigarettes account for a smaller share, their stable growth makes them an important supplement to demand.
Mining investment is never a simple commodity game. When you buy shares in Albemarle or SQM, you are actually betting on the global energy transition trend, participating in a grand narrative from the depths of the earth to the consumer’s hands.
Data Sources and References:
BloombergNEF (Battery Prices, Market Outlook)
International Energy Agency - Global Critical Minerals Outlook 2025
MMR Statistics, IMARC Group, Mordor Intelligence (E-cigarette Market Data)
Albemarle, SQM, Tianqi Lithium (Company Financial Reports and Announcements)
Mining.com, Investing News Network (Industry Analysis)
About the Author: This article aims to provide a mining investment perspective for the ceo.ca community. The views expressed in this article represent only the author’s personal analysis and do not represent the platform’s position. Readers are welcome to share their insights on this topic in the comments section.
