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CHINA MOVES TO LOCK DOWN DEVELOPING WORLD’S LITHIUM TROVES
China dominates lithium refining but has only 8 percent of the world’s raw lithium, less than Argentina, Bolivia, or Chile. Even the U.S. has more lithium ore than the Asian giant.
As a result, China is moving aggressively across the developing world, particularly in Africa, to buy into those nations’ deposits of a mineral that is seen as defining the world’s energy future.
If current trends in lithium demand persist, the world will fall 300,000 tons short of the world’s needs by 2030, according to Benchmark Mineral Intelligence, a research service.
If successful, China’s current buying campaign could give it control of a third of the world’s lithium deposits before 2026.
However, China is seeking to swing its financial and political weight in countries with often weak or unstable governments, histories of chaotic protests, and resource nationalism that has resulted in violence and property destruction.
Given China’s desire to continue to control lithium refining, and thus the world’s market in energy mobility, “it has no choice but to try” to grab a larger share of other countries’ reserves, Susan Zou, vice-president of consulting firm Rystad Energy, said to The Wall Street Journal.
In just the past two years, Chinese companies have put $4.5 billion into 20 lithium mines in Chile, Mali, Mexico, Nigeria, Zimbabwe, and other developing countries, Rystad reported.
Most of the investments have been in Africa and Latin America.
Governments of developing nations are drawn to China because of its developed industries of lithium processing, battery making, and electric vehicle production, the WSJ noted.
Those lithium-dependent industries mean the country is interested in maintaining a secure, long-term supply instead of just mining at the cheapest cost and selling the lithium for a quick profit, which gives the host countries a guaranteed, long-term revenue stream, the newspaper said.
Also, China’s investments generally are accompanied by infrastructure projects such as roads able to handle heavy truck traffic and extensions of the electric grid.
Still, Chinese projects in Mali and Nigeria have drawn terrorist threats.
Mexico has moved to nationalize its lithium reserves. Zimbabwe has banned exports of raw lithium, which would force China to process its ore in-country.
In Bolivia, China has formed a joint venture with a state-owned lithium company. Before work can begin, Bolivia’s legislature must pass a law allowing foreign companies to mine lithium there.
Also, Bolivia’s government has a history of suddenly scrapping agreements with foreign firms if presidents or political winds change.
Chile’s government is negotiating with at least 40 investors from more than a dozen countries interested in owning a part of the country’s lithium industry. The state will hold a majority interest in each project to ensure environmental protection and maximize the value Chile receives, deputy trade minister Claudia Sanhueza said in a press statement earlier this month.
Chinese president Xi Jinping has openly scolded his nation’s mining companies for rushing headlong into countries and markets in which they lack understanding.
“You should avoid charging ahead on your own, thinking you’re invincible, only to be caught wanting in the end,” he told Robin Zeng, chair of CATL, the world’s largest lithium processor and lithium battery maker, according to Chinese state media.
Argentina, Bolivia, and Chile are discussing forming a lithium cartel, modeled on oil’s Organization of Petroleum Exporting Countries.
TRENDPOST: Lithium will remain a key resource for our electric future of smartphones, tablets, EVs, and other devices requiring batteries.
However, a spate of alternative battery chemistries are in development that will cut demand for lithium as they come to market, as we have detailed in such stories as “SES Breaks Ground, and Barrier on Solid-State EV Batteries” (9 Nov 2021), “A Battery That Runs on Water” (28 Jun 2022), and “Major EV Makers Adopt Cheaper Battery Formula to Cut Car Prices” (29 Nov 2022), among many others.
Lithium will remain key to mobile energy but will become one of many crucial ingredients, many of which are cheaper and more abundant, cutting the cost of EVs to compete with gas-powered cars.
CHINA BECOMES WORLD’S LEADING AUTO EXPORTER
In this year’s first quarter, China surpassed Japan to become the world’s leading auto exporter, shipping 1.07 million vehicles, 58 percent more than a year earlier, the government reported.
“Surging exports to Russia gave the country’s car exports a big bump,” The Wall Street Journal said.
During the same three months, Japan exported 950,000 vehicles, the Japan Automobile Manufacturers Association’s figures show.
In this year’s first four months, China’s shipments of vehicles and vehicle parts to Russia more than tripled to $6.1 billion, China’s export authority said.
However, China’s record auto exports are not down to Russia alone.
In 2022, 35 percent of the electric vehicles (EVs) exported in the world were made in China, compared to 25 percent the year before, the International Energy Agency said.
From 1 January through April, China shipped 335,000 EVs and hybrid vehicles, more than double the number a year earlier, the China Association of Automobile Manufacturers reported.
Tesla alone exported 130,000 cars from China during the period.
BMW, Renault, and Volkswagen are among other car companies that make cars in China for export, largely because of China’s thoroughly developed infrastructure in lithium batteries and EV manufacture, as well as its low-cost labor force.
However, Western car makers are being outpaced by BYD, SAIC, and other domestic Chinese makers.
China has largely leapfrogged Western companies in the development of EV technologies.
Unburdened by legacy factories, workers, and cultures—and aided by lavish government subsidies—China’s car companies quickly evolved an ambitious research base; sophisticated, end-to-end supply chain; and state-of-the-art factories.
Government subsidies also helped cultivate a thriving domestic EV market, in which BYD has now introduced its Seagull hatchback at a price equivalent to $11,000.
Chinese firms are establishing factories in Europe and are knocking on the U.S.’s door, hoping to introduce cheap EV imports as a foothold that will lead later to factories in America owned by Chinese car companies.
TREND FORECAST: China will use its leverage in EVs to establish vehicle factories in countries where domestic industries are unable to compete with China’s cars on price.
With that foothold, China will seek to build or buy other businesses, weaving itself deeper into the economies of individual nations and, thereby, of the world.
Because China plans its economy centrally and for the long term, it remains very possible this is a forward-looking strategy that China already has put into practice.
As Gerald Celente has long noted, “The 20th century was the American century, but the 21st century will be the Chinese century because the business of America is war while the business of China is business.