“We are going to continue to remain dependent on China and I think the capital costs and economics are ultimately going to drive a lot of this,” Sarah Maryssael, the chief strategy officer of global lithium technology company Livent, said while talking about the global electric vehicle (EV) supply chain at the FT Mining Summit in London on Friday.
“We're seeing a lot of government incentives being poured into [reducing Chinese dependence]. But the development of a supply chain outside of China, is what the West lacks. China has a lot of very strong chemical engineering and refining capability. We have lost that in the West. We don't build refineries and conversion capacities anymore, the way that we would once,” she added.
Maryssael was commenting on the geopolitical moves to rebalance dependence on China for critical minerals required for the energy transition.
The US’s initiative to reduce dependence on China started with the Biden administration’s Inflation Reduction Act (IRA) in 2022 that offers companies hundreds of billions of dollars in tax breaks to make clean technologies in the US. Following suit, the EU, under its green deal industrial plan, also announced a target to make 40% of “strategic net zero technologies” within its borders by 2030.
However, China dominates each step in the production of a lithium-ion battery, a key component in EVs. EVs use six times more rare minerals than conventional cars because of their batteries. Currently, China, either by domestic mining or acquiring stakes in mining companies globally, controls 41% of the world’s cobalt and most of the mining of lithium. Approximately 67% of global lithium supply is processed by China, along with 73% of cobalt, 70% of graphite and 95% of manganese, all critical minerals for green technologies.
With its existing capacity for both refining and processing critical minerals, China has an edge over western countries now trying to wean themselves off the country.
“We have to make cars affordable and do this on a more cost competitive route," Maryssael said. "[However] with China it is not just about cost but also about the know-how. Having the expertise is making China extremely competitive. And until we can attract more people into mining, chemical engineering and mechanical engineering, to build and operate refineries, I think we're going to continue to struggle.”
In September this year, the European Commission launched a probe into subsidies in China for EV makers amid concerns that cheaper EVs are harming the interests of European companies.
“Global markets are now flooded with cheaper Chinese electric cars, and their price is kept artificially low by huge state subsidies. This is distorting our market,” European Commission President Ursula von der Leyen told EU lawmakers in her annual State of the Union address.
While the US and EU have also launched several financial incentives for EV batteries to be made domestically, a paper prepared by the current holders of the rotating EU presidency, Spain, reiterated that the EU could become as dependent on China for lithium-ion batteries and fuel cells by 2030 as it was on Russia for energy before the start of the war in Ukraine, unless it changes course.
Australia has bid to end dependence on China for lithium refining by creating a homegrown lithium refining industry with the help of the US’s IRA.
