China’s lithium sulphide industry is continuing to scale up as battery manufacturers advance the development of sulphide-based solid-state batteries, but a surge in demand is unlikely to arrive in Q4 2026.
According to Shanghai Metals Market (SMM), China produced 7.79 tonnes of battery-grade lithium sulphide in August, up 3.6% month-on-month and 143% year-on-year.
During the first eight months of 2026, Chinese production reached 52.9 tonnes, exceeding the 34 tonnes produced globally in 2025. By August 2026, China accounted for roughly 95% of global lithium sulphide production, with overseas production constrained by equipment commissioning and relatively weak downstream orders.
SMM expects Chinese lithium sulphide production to rise around 9–10 tonnes per month during Q4, representing a 15–25% increase from the roughly 8 tonnes a month recorded in Q3.
That would mark continued growth, but it falls short of the kind of increase that could signal mass adoption of solid-state batteries.
What’s holding the key?
Lithium sulphide is a key raw material required for many next-generation solid-state battery chemistries. It acts as a cathode material or precursor for high-energy-density batteries and is used as a raw material to build sulphide-based solid electrolytes for next-generation batteries.
Unlike conventional lithium-ion batteries, solid-state batteries replace the liquid electrolyte with a solid material. Sulphide electrolytes are particularly attractive due to their high ionic conductivity and ability to form good contact with battery electrodes.
But the technology remains in the pre-commercialisation phase.
SMM reports that leading battery manufacturers have yet to enter large-scale procurement cycles for sulphide electrolytes. This means that lithium sulphide producers are unlikely to use their growing capacity at full rates in the immediate term.
That is why SMM expects lithium sulphide production to reach 85–95 tonnes in 2026, rather than accelerating in Q4.
The turning point is likely to come when solid-state batteries move from pilot lines and testing into commercial vehicle deployment.
According to SMM, sulphide-based all-solid-state batteries are likely to take longer to commercialise than some competing technologies, with broader deployment potentially occurring from 2028–2030.
However, the industry is continuing to move forward. For example, in early August 2026, China completed its first test of a sulphide-based all-solid-state battery, while multiple companies continue to develop electrolyte and battery-material production capacity.
So, the technology is not yet consuming huge volumes of lithium sulphide, but manufacturers are building the supply chain that will be needed if it succeeds.
What does this mean for miners?
An increase in lithium sulphide production does not translate directly into a rise in mined lithium demand.
However, the development is considered important as it highlights how the lithium market can broaden beyond its existing demand drivers.
For example, electric vehicles (EVs) have been a leading source of lithium demand growth, while battery energy storage systems (BESS) are becoming more important.
According to the Department of Industry Science and Resources (DISR), global lithium demand is forecast to grow by more than 11% per year through 2031, driven by continued EV adoption and BESS deployment.
Solid-state batteries represent another potential layer of demand further down the road.
For lithium-focused producers, developers, and explorers, this matters as the next lithium cycle is unlikely to be determined by one battery technology alone.
Who’s contributing to the market?
Avalon Advanced Materials (TSX:AVL) is one of the many companies positioned to meet global lithium demand as it seeks to build North America’s largest lithium hydroxide refinery, with first-stage production of 30,000 tonnes per year.
“We are positioned to be the first entrant into the market with battery-grade lithium hydroxide that the Western market needs in terms of refining,” Avalon’s Vice President of Corporate Development Christopher Senyk says.
“I would say we’ll be a Western world and definitely North American leader in lithium hydroxide. Let’s put it this way: at 30,000 tonnes, [Lake Superior Lithium] would be the largest refinery in the Western Hemisphere.
“There’s currently no real lithium hydroxide refinery in Europe. There are two established lithium refineries in North Carolina, with capacities of 15,000 and 5,000 tonnes, respectively.”
Lake Superior, which is set to build lithium hydroxide processing capacity for North America, is located in Thunder Bay, Ontario, Canada. The project has robust economics with a post-tax net present value of C$4.1 billion ($4.13 billion) and an internal rate of return of 48%.
Andrada Mining (AIM:ATM) is another company contributing to global lithium supply via its three key assets in Namibia — the Uis tin mine and the Lithium Ridge and Brandberg West projects — all at different stages of life.
Uis, covering 19,700 hectares, hosts numerous pegmatites with mineralisation including lithium, tin, tantalum, and rubidium.
Previously speaking to Mining.com.au, CEO Anthony Viljoen says the company expects to double tin production and include lithium in the circuit.
“There is a lot of work underway to expand those operations,” he says.
Andrada Mining’s Lithium Ridge Project is also expected to be in full production as soon as possible.
“This Lithium Ridge, it literally was a 6km ridge of high-grade spodumene. We sampled the ridge and the geology stacked up really well,” Viljoen says.
“In my view, it’s probably the most significant lithium discovery in Southern Africa in the last five years.”
Where do explorers fit?
For lithium explorers, the significance of lithium sulphide is less about production numbers or project economics, and more about what their project has to offer.
For example, Q2 Metals (TSX-V:QTWO) owns the Cisco Lithium Project in Québec, Canada.
Cisco’s current resource totals 270 million tonnes (Mt) @ 1.36% lithium oxide (Li2O), as well as an additional underground-constrained resource of 24Mt @ 1.34% Li2O.
The company recently received assays from a 2026 Canadian summer drill program, which returned 60.8m @ 1.24% Li2O, 213.8m @ 1.93% Li2O, and 403.7m @ 1.57% Li2O.
Vice President of Exploration Sage McCallum says the hole exceeded the company’s expectations, intersecting three wide mineralised zones that collectively span 678m of the 803m hole — “making it the best hole ever drilled on the Cisco Project in terms of total mineralised pegmatite in one hole”.
The lithium sulphide market offers a brief look into the next potential wave of lithium demand as solid-state batteries move closer to commercialisation.
For lithium producers, developers, and explorers, the opportunity is less about an immediate demand surge and more about positioning for a battery market that could require diverse sources of lithium in the years to come.
Write to Aaliyah Rogan at Mining.com.au
Main Image: iStock
