China leads world in race for 'white gold': Lithium

Mark O'Neill April 13, 2023 10:08

China is leading the race among industrialised nations to buy and refine lithium, the key component to make batteries for the electric cars that will dominate the global market in the 2030s. Many call lithium “white gold”.

On March 22, the first Chinese-owned lithium concentrate plant in Africa, at Arcadia, Zimbabwe began production. Zhejiang Huayou Cobalt said that it had started trial production of the concentrates and that it would spend US$300 million to build a plant to process 4.5 million tonnes of lithium ore a year at Arcadia. In 2022, Huayou Cobalt bought the mine for US$422 million.

In 2022, China produced 58 per cent of the world’s refined lithium, ahead of Chile with 31 per cent and Argentina with nine per cent. In 2022, China produced 75 per cent of the batteries for electric cars, followed by the U.S. with seven per cent, the EU six per cent, South Korea five percent and Japan four per cent.

Last year, of the world’s top six producers of electric car batteries, two were Chinese – Contemporary Amperex Technology Company (CATL) with 35 per cent of the global market and BYD with 12 per cent. Of the other four, three were South Korean and one Japanese.

In terms of reserves, three countries in South America – Bolivia, Argentina and Chile – account for 53 per cent of the global total. Other countries with large reserves are the U.S., Australia, China, Germany, Canada and the Democratic Republic of Congo.

China has taken the lead because its firms have invested more aggressively than their competitors in acquiring new mines and building refining capacity. They are willing to take more risk on mines in remote locations with poor infrastructure and unstable governments than western companies and banks. The U.S. and European Union are racing to catch up.

In June last year, the European Parliament voted to ban the sale of new petrol and diesel cars from 2035. New York and California have adopted similar laws.
Huayou Cobalt has also invested in Erongo, Namibia, a southwest African country with substantial reserves. Xinfeng Investments has also invested in lithium mines in Namibia.

In a statement last November, Xinfeng said that it had shipped 75,216.36 tonnes of lithium ore from Namibia to China. The ore was being used in China for tests to design a modern and efficient processing plant, which must be built in Namibia. The ore only contained one per cent lithium, it said.

Russell Fryer, executive director of Critical Metals, an investor in African mines, said: “It’s not so much fear of the Chinese getting to Africa first. They are there first. It has already happened.”

Germany is an industrial power far behind China in the race. At the end of January, Chancellor Olaf Scholz led a large business delegation to Chile and Argentina, which sit above “the lithium triangle”, the world’s largest single deposit.

In Santiago, capital of Chile, he signed a new, expanded commodities partnership aiming at intensifying cooperation in the sector. That will include an annual bilateral forum and state instruments like investment guarantees to promote trade.

"We want to help Chile on the way to a sustainable mining sector," Scholz told a news conference, pointing to a new cooperation deal signed between Europe's largest copper producer Aurubis and Chilean state copper company Codelco.

A Bolivian-German lithium joint venture signed in 2018 fell apart two years later amid domestic political turmoil.

Japan has also fallen behind China. In 2021, electric vehicles (EVs) only accounted for one per cent of Japanese domestic auto sales, compared to 16 per cent in China and six per cent in South Korea.

Akira Yoshino, who won the 2019 Nobel Prize for chemistry, said that Japan must rapidly increase EV sales if it wants to lead the global storage battery market and compete with China and South Korea in 2025.
“Our domestic market for EVs has been the slowest among the major battery producers to expand,” he said. ”Mass production technology is an area Japan has strength in.”

Last August the Japanese government released a strategy that calls for a domestic manufacturing base for batteries and materials totalling 150 gigawatt-hours a year by 2030. It aims to increase ten-fold manufacturing capacity of the batteries by 2030 to 600 GWh, which would be a 20 per cent share.

The battle for lithium and electric cars is underway – and China is winning.

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Mark O'Neill

A Hong Kong-based writer, teacher and speaker.