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Tuesday, February 27, 2024

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Tuesday, February 27, 2024

China controls 70% of global lithium production; that’s a worry for the world

"Control oil and you control nations", former US Secretary of State Henry Kissinger once said.

New Delhi:

“Control oil and you control nations”, former US Secretary of State Henry Kissinger once said. Today, it could be argued that to control lithium – white oil as it were – is to control nations, Marina Yue Zhang said.

Lithium has become a critical mineral in green technologies, with lithium-ion batteries used to power electric vehicles, and to store wind and solar energy.

Like oil, lithium, is not evenly distributed in the world. Nearly 80 per cent of known deposits are in four countries – the South American lithium triangle of Argentina, Bolivia and Chile, and Australia. However, holding less than 7 per cent of the world’s lithium reserves, China is the world’s largest importer, refiner and consumer of lithium, buying 70 per cent of lithium compounds and supplying 70 per cent of lithium production, largely to domestic lithium battery makers, six of which are among the top ten in the world, Zhang said.

Marina Yue Zhang is an associate professor at the Australia-China Relations Institute, University of Technology Sydney.

China’s lithium dominance has caused concerns. Both the European Union and the United States have prioritised building greater self-sufficiency in raw materials, lithium included, in their industrial policies, aiming to curb their reliance on China and boost homegrown green technologies. This exposes China’s vulnerabilities in its transition to clean energy, Zhang said.

Characterising batteries as the battlefield, Foreign Policy said that the next geopolitical contest may be over green technology, and China, for now, is poised to win control of those supply chains.

In the quest for the clean energy revolution, the United States is one of many countries that have ramped up investment in electric vehicles manufacturing and renewable energy sources to power the shift away from fossil fuels.

But that is an industry that has already been staked out by another power: China. After a decades long push, Beijing wields considerable control over supply chains for lithium-ion batteries, which are critical to everything from electric cars to smartphones. That dominance has transformed those powerful batteries – and the key metals they comprise of – into a thorny geopolitical flash point during a period of heightened tensions, Foreign Policy reported.

“China is the dominant player across the supply chain for almost all of these critical minerals,” said Morgan Bazilian, director of the Payne Institute at the Colorado School of Mines and a former lead energy specialist at the World Bank, the report said.

Is containing China the best option for the world? Zhang said over the past decade, China has invested heavily in transitioning to clean energy, including developing technologies and production know-how covering the entire lithium supply chain. It has paid substantial environmental costs through trial-and-error innovation and has now developed dominant advantages in not just the scale of mass production, but also green technologies used in lithium processing. It is debatable whether that cost should be repeated by other countries.

China’s control of refined materials for battery cells and its advanced battery-making technologies are particularly important. So important that Western automakers who want to transition out of gas cars won’t be able to do it without turning to Chinese-made batteries. That’s why Ford has been planning for a long time to build a battery plant with Chinese battery giant CATL, the world’s largest manufacturer of lithium batteries, news agencies reported.

Chinese companies have managed to make good quality batteries in large quantities and at a low cost. It will be commercially unviable to avoid using Chinese batteries, and it will take a long time for domestic battery companies to rival the size and efficiency of CATL, news agencies reported.

Ford’s new plant will focus on making LFP batteries, which use iron rather than the cobalt and nickel used in the other main type of lithium battery, known as NMC. Compared with NMC batteries, which are widely used to make EVs in the US and Europe, LFP batteries cost less, have a longer life cycle, and are safer when it comes to the possibility of catching fire.

But just a few years ago, LFP batteries were considered an obsolete technology that would never rival NMC batteries in energy density. It was Chinese companies, particularly CATL, that changed this consensus through advanced research, news agencies reported.

“That’s purely down to the innovation within Chinese cell makers,” said Max Reid, senior research analyst in EV and battery supply chain services at the global research firm Wood Mackenzie. “And that has brought Chinese EV battery (companies) to the front line, the tier-one companies.”

As a result, “China is leading by quite a distance in terms of cell production capacity, and essentially leading nearly all of LFP production, which is now a very promising technology,” Reid says, the report said.

“Even if we are talking about those batteries based on cobalt and nickel, China still has a stronghold on the industry because the majority of the world’s refinery capacity for these materials is inside China. The fact that it produces a lot of these upstream materials means that not only can China reasonably control the costs of battery production, but it can potentially hold it hostage against any other country that relies on these materials for its transition into EVs”, news agencies reported.

China’s position in downstream supply chains for the battery metal is even more dominant. The country only mines 13% of the world’s lithium but controls 44% of global lithium chemical production, 78% of cathode production and 70% of cell manufacturing for the electric car industry, news agencies reported.

The giant Chinese battery company, CATL, has won a bidding process to develop Bolivia’s huge lithium reserves, news agencies reported.

The ultra-light metal is used in electric vehicle (EV) batteries, production of which is expected to soar as fossil fuels are phased out.

Bolivian President Luis Arce said the CATL-led consortium was launching the “historic” industrialisation of lithium in Bolivia, news agencies reported.

More than $1bn will be invested in the project’s first phase, he said.

Australia and Chile are the world’s biggest lithium producers, but Bolivia has huge reserves in the Potosi and Oruro salt flats.

Technical hurdles and a lack of infrastructure have long delayed the extraction of lithium in Bolivia, whose reserves are estimated at 21m tonnes, news agencies reported.

Arce said Bolivia was still negotiating with other foreign companies for potential partnerships.

Arce said the goal was to start exporting lithium batteries in the first quarter of 2025.

Argentina, Bolivia and Chile share an expanse of salt flats, or salars, called the “lithium triangle”, holding more than 75% of the world’s lithium deposits, news agencies reported.

Brine is pumped from beneath the salt flats into vast evaporation pools, a process that leaves behind lithium carbonate. But the technical challenges of lithium mining have raised concerns about pollution and commercial viability in South America and other parts of the world. IANS

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