Lithium projects outside China have been at the mercy of markets, declining and expanding as the price of lithium ebbs and flows. But domestic investment has been almost constant. As a result, China is the only country that can take lithium from raw materials to finished batteries without having to rely on imported chemicals or components. This is mostly due to a political environment that focuses on reducing the cost of lithium rather than maximizing shareholder value.
But China does not produce nearly enough lithium to satisfy its domestic appetite – and moreover, only about 10 percent of the material that goes into a battery is actually lithium. The country is still dependent on imports of cobalt, nickel, copper and graphite, ensuring a degree of mutual cooperation so far. “It really is an intertwined system,” says Lukasz Bednarski, a battery-material analyst and author of Lithium: The global race for battery dominance and the new energy revolution. “The Western world and China are in a way interdependent.”
Neither side is interested in starting a trade war, which has resulted in a somewhat troubled standoff, Barron says. “If China decides not to export batteries for electric vehicles, countries in the West may decide not to export nickel to China,” he says. “China does not have the refineries to produce nickel of the highest purity.”
The balance of power may change as both sides invest in energy dependence. While the West is struggling to build mines and factories, China is beginning to exploit untapped sources of lithium in Xinjiang and the salt lakes on the Tibetan plateau. It can come at a human cost: a report by New York Times found evidence of forced labor in mining in Xinjiang, which could be a potential hotspot if sanctions designed to protect the Uighur minority were to prevent Western companies from importing chemicals mined in that region.
In the end, lithium is not fundamentally scarce. As prices rise, new technologies can become more economically viable – a way to extract lithium from seawaterfor example or a hero new type of battery chemistry which eliminates the need for lithium completely. In the short term, however, supply damage can disrupt the switch to electric cars. “There may be hiccups – years where commodity prices skyrocket and there is a temporary shortage in the market,” says Bednarski.
Chinese carmakers will have a huge advantage if that happens. Already, Chinese brands like Nio and Chinese-owned European brands like MG launch of electric cars in the West there are the cheapest on the market. “Chinese-owned Western companies will have a massive advantage over their European or American competitors,” says Barron.
When the lithium plant in Kwinana is operational, it will ship 24,000 tonnes of Australian lithium hydroxide per year. But the lithium, extracted in Australia for batteries built in South Korea and Sweden and destined for electric cars sold in Europe and the United States, is dependent on China at every step of its journey. The shell of the old oil refinery still stands as a monument to the centuries-long struggle for fossil fuels that reshaped the world, but a new race is on the way – and China is in the driver’s seat.