CHINA’S LITHIUM ION BATTERY SUPPLY CHAIN DOMINANCE 3rd October...

CHINA’S LITHIUM ION BATTERY SUPPLY CHAIN DOMINANCE
3rd October 2022 China BENCHMARK MINERALS

North America and Europe want to develop local battery supply chains, but removing China from the equation will be difficult given how embedded the country is in the processing of battery minerals.
While most of the world’s lithium, nickel, and cobalt for batteries is mined outside of China, the majority of all critical minerals for the battery supply chain are further refined and processed in China.
With the exception of mining, China controls at least half of the supply from every step needed to make a lithium ion battery.
“Continuous R&D and technology innovation, fast construction speed of infrastructure and factories, as well as labour advantages, have helped to form a complete chain from mining and chemical all the way to EV-making,” Albert Li, an analyst at Benchmark, said.

STRENGTH IN REFINING
Lithium, mostly mined as spodumene in Australia or extracted from brine pools in Chile and Argentina, is typically shipped to China for conversion to lithium carbonate or lithium hydroxide. Almost 60% of lithium refining occurred in China, despite just 13% of lithium being mined there.
Of all the critical minerals, cobalt is the one China has the least amount of mining for, with less than 1% coming from the country. The vast majority is mined in the Democratic Republic of Congo (DRC). But three-quarters of this is then processed by China. Much of this is also sourced from Chinese-owned mines in the DRC.
Of the metals, China has the largest share of refining for manganese. Despite mining less than 10% of the global supply, it refines 95% of it.
The material China has the biggest overall dominance over is graphite. Not only does it mine 64% of natural flake graphite, it has a monopoly on converting into the spherical graphite needed for anodes. From the mining side, China is forecast by Benchmark to fall second to Africa over the next decade.
Over two-thirds of synthetic graphite, which is produced from petroleum coke, is produced in China. The majority of this comes either from Inner Mongolia where electricity is cheap, or Sichuan province where there is abundant hydroelectric power. However, recent changes in Inner Mongolia electricity policies, and drought in Sichuan put these sources under stress.
AND STRONG ALL THE WAY DOWNSTREAM
In 2022, Benchmark forecasts 70% of all batteries will be made in China. This is supported by strong control of the midstream, with a near monopoly over anode production and over three-quarters of cathode production.
China’s battery dominance began with a policy decision in 2015 to effectively ban foreign battery producers from the market, by making them ineligible for subsidies.
The so-called “White List” only contained domestic cell producers, forcing South Korean and Japanese companies like LG and Panasonic with factories in China out of the game. Although this list was cancelled in 2019, its influence can still be felt today.
“China took advantage of the prime and important years from 2015 to 2019 with the help of the White List,” Li said. “China started to nurture its own battery supply chain, and later formed a strong fleet of domestic cell producers, and all the other battery-related industries which were all growing strong together.”