Very unlikely that China will ever be able to supply its own Lithium demand locally, this is all pie in the sky analysis by GS.Surging demand
This intense activity underlines the market's prediction of a continuous surge in lithium battery demand.
Pricing and research firm Benchmark Mineral Intelligence projects that global demand for lithium will reach 1.5 million tonnes by 2028, from the current 900,000 tonnes.
According to Chinese customs data, exports of lithium batteries from China amounted to A$26.7 billion during the first five months of this year, a 66% increase from the same period in 2022.
It is worth noting that while China's domestic lithium mines contribute about 12% of the global lithium supply, the country refines nearly 55% of the world's lithium, largely using imported Australian ore.
Geopolitical concerns
The shift in China has partly been due to geopolitical dynamics that are shaping business decisions around the world.
Western nations have been prioritising their own and allied countries’ needs for lithium supply, potentially restricting China’s access to vital lithium reserves overseas.
At the same time, countries aligned with the United States are intensifying their scrutiny of Chinese investments in critical mineral reserves such as lithium, citing national security implications.
Last month, Canberra blocked the sale of an Australian lithium miner to a US company whose Australian subsidiary included a director with Chinese citizenship.
Similarly, officials in Ottawa ordered three Chinese companies to sell their stakes in Canadian companies extracting critical minerals in November last year, citing national security concerns.
Ensuring continued access
Recognising these challenges, Beijing is pushing for increased domestic supply to ensure it has continued access to essential resources.
China's Ministry of Natural Resources announced plans earlier this year to strengthen the identification and mining of domestic mineral reserves, including lithium and assuring support for mining exploration.
China possesses only 7% of the world’s known lithium reserves, of which less than one-third can be commercially mined due to inferior quality and dispersed geographical location.
However, industry experts have cautioned that China's aggressive lithium push may face obstacles due to financing as well as mining inexperience, the latter concerning the impact of exploration activities on the environment.
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