conversion capacity in China which has enabled them to effectively be the only game in town for spodumene producers. The west was first to produce lithium chemicals, invented the rechargeable lithium battery and LFP cathode. The west handed China lithium market dominance by worshipping at the “alter of outsourcing” capacity to the lowest cost country. Now we are paying the price. Rebalancing global lithium chemical supply will take time and willpower.
Creating a battery supply chain that tries to totally avoid China is probably a flawed (or at least a sub-optimal) strategy but could be done if the will/capital was there. What makes more sense to me is a hybrid strategy of continuing to work with China while building a viable alternative supply chain.
China used the likes of VW, GM and Tesla while developing their auto and later EV industry. Now those three companies are expendable to the Chinese and their declining performance in the China market clearly shows it. Why shouldn’t the west benefit from CATL and BYD while growing alternatives that can compete with them across the battery supply chain? It comes down to will, policy and capital.
The IRA in the US and various “green” policies in the EU need rethinking and much more concrete action to enable any chance of the west beginning to play a credible game of lithium battery “catch up”.
Fortunately for lithium investors, the west still has the lowest cost lithium producers and the best lithium assets. The arrival of companies like Exxon, Equinor and Oxy along with Rio Tinto into the lithium space provides the kind of balance sheet power the industry needs. GM’s investment in Lithium Americas is to date a largely unappreciated move that in my opinion will be looked back on in 2030 as a brilliant play by the automaker.
4) Thinking the 2022 price bubble was reality.
This may be a corollary to my first point but currently there is a common narrative that current lithium prices are low. Today’s spot price in China is a reasonably high price by the
standard of prices
since 2000. In 2019 I presented this graph during a tour of Australia and published it on Linked In. Clearly, I didn’t foresee the price spike in 2022 but my point is that the
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