The world can’t wean itself off Chinese lithium

The Kwinana port is an example of the global energy industry. The Anglo-Persian Oil Company owned the largest oil refinery in the region from 1955 to 1955. It used to provide 70% of Western Australia's fuel supplies, and the metal husks of old tanks still dominate the shoreline.

The refinery shut down in March 2021, but it isn't just oil below the region's red soil. The race to secure the clean energy sources of the future is being dominated by China as the trucks and machinery are humming once again.

Over the past 30 years, lithium has become a prized resource. It’s a vital component of batteries—for the phone or laptop you’re reading this on, and for the electric vehicles that will soon rule the roads. But until recently, the 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 gobbled up about 40 percent of the 93,000 metric tons of raw 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 foreign carmakers like BMW, Volkswagen, and Tesla. Advertisement

According to estimates, China could have as much as 80% of the market for batteries. One of the largest EV battery producers is based in China and makes three out of every ten EV batteries. The dominance goes all the way through the supply chain Chinese companies have benefited from huge government investment in the process of mining and manufacturing. The rest of the world is worried, and the United States and Europe are trying to wean themselves off Chineselithium before it's too late.

An electric car battery can hold up to 60 kilowatts of power. By 2034, the US alone will need half a million metric tons of unrefined lithium for EV production. The global supply in 2020 is less than that. There is fear that a repeat of the oil crisis sparked by Russia's invasion of Ukraine could happen. China might shut off its supply of batteries just as Western automakers need them to power the switch to EV.

Andrew Barron, a professor of low carbon energy and the environment, says that if China sticks with the home market, the cost of batteries will go up outside of China. Efforts to expand battery production capacity are more important than ever.

Efforts are taking shape. There will be 13 new gigafactories in the US and 35 in Europe by the year 2025. With many projects beingset by logistical problems, protests, and NIMBYism, that is a big if.

The gigafactories are going to require a lot of it. The Defense Production Act will be used to fund domestic mining of critical battery materials under the auspices of national security. Europe is trying to create a green battery supply chain with a focus on recycling.