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The world can’t wean itself off Chinese lithium

in great shape , A customs officer inspects imported lithium carbonate at the Longwu branch terminal of Shanghai International Port Co., Ltd.

The industrial port of Quinana on the west coast of Australia is a microcosm of the global energy industry. From 1955, it was home to one of the largest oil refineries in the region, owned by British Petroleum, when it was still the Anglo-Persian Oil Company. It once provided 70 percent of Western Australia’s fuel supply, and the metal husks of old tanks still dominate the shoreline, slowly turning to rust in the salt air.

The refinery closed in March 2021, but that’s not the oil beneath the region’s red clay: Australia is also home to nearly half of the world’s lithium supply. Trucks and machinery are humming once again, but now they are part of the race to secure the clean energy sources of the future—a race dominated by China.

Over the past 30 years, lithium has become a prized resource. It’s a vital component of the battery—for the phone or laptop you’re reading this on, and for the electric vehicles that will soon rule the streets. But until recently, lithium mined in Australia had to be refined and processed elsewhere. When it comes to processing lithium, China is in a league of its own. The superpower will grab about 40 percent of the 93,000 metric tons of crude lithium mined globally in 2021. Hundreds of so-called gigafactories across the country are churning out millions of EV batteries for both the domestic market and BMW, Volkswagen, and foreign carmakers. Tesla.

According to BloombergNEF estimates, China could account for up to 80 percent of the lithium-ion battery market. Six of the 10 largest EV battery producers are located in China—one of them, CATL, makes three out of every ten EV batteries globally. That dominance spreads through the supply chain. Chinese companies have signed preferential deals with lithium-rich countries and have benefited from huge government investment in complex moves between mining and manufacturing. This has rattled the rest of the world, and the United States and Europe are now scrambling to wean themselves off Chinese lithium before it’s too late.

An electric car battery contains 30 to 60 kg of lithium. It is estimated that by 2034, the US alone will need 500,000 metric tons of crude lithium per year for EV production. This exceeds the global supply in 2020. Some experts fear a repeat of the oil crisis from Russia’s invasion of Ukraine, in which geopolitical tensions have escalated into a war of sanctions. Such a scenario could result in China shutting down its supply of batteries like Western automakers require them to switch to EVs.

“If China decides to stick with the domestic market, lithium-ion batteries are going to be more expensive outside of China,” says Andrew Barone, professor of low-carbon energy and the environment at Swansea University. He says Western efforts to expand battery production capacity are “more imperative than ever”.

Those efforts are taking shape, albeit slowly. If all goes according to plan, there will be 13 new gigafactories in the United States by 2025, joined by an additional 35 in Europe by 2035. (It’s a big, if logistical problem with many projects beset with protests and NIMBYism, most notably Tesla’s controversial Gigafactory near Berlin.)

But those gigafactories need lithium—and lots of it. In March, US President Joe Biden announced plans to use the Defense Production Act to fund domestic mining of lithium and other critical battery materials under the auspices of national security. Across the Atlantic, the EU is pushing legislation to try to create a green battery supply chain within Europe, with a focus on recycling lithium.

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