Written by / Ma Xiaolei
Editor/ Wu Jing
Design / Shi Yuchao
Source/Financial Times, by James Fernyhough
China's dominance in the supply chain of power battery raw materials has made Western countries particularly red-eyed.
An Australian lithium producer has warned that battery manufacturers have a serious lithium shortage, illustrating the need to challenge China's dominance in the raw material supply chain.
Stuart Crow, chairman of Lake Resources, an Australian supplier of clean lithium, said the BOOM in electric vehicle manufacturing would not last long because Western countries and businesses did not establish enough lithium supply chains.
"There's simply not enough lithium on Earth, no matter who's mining or who's supplying," he said. ”
Lithium miners are not short of business at all. Lake Resources signed a memorandum of understanding with Japanese import-export group Hanwa to deliver 25,000 tons of lithium carbonate per year, and a non-binding memorandum of understanding with Ford Motor, whose share price doubled in March to a market capitalization of $1.9 billion.
Governments are scrambling to decarbonize the economy, and lithium-ion batteries are crucial for them. Western countries are racking their brains to weaken China's grip on lithium-ion supply chains, especially in terms of processing capacity. The devastation caused by the Russo-Ukrainian war and the sanctions imposed on Russia have further highlighted the importance of securing energy supplies.
"Now, China basically controls 70-80% of the entire supply chain of electric vehicles and lithium-ion batteries, and also has energy reserves, while Western countries have been slow to ensure supply chains," Crowe said. ”
Daniel Morgan, a mining analyst at investment bank Barrenjoey, said the eviction production targets set by automakers or governments are unlikely to be met.
Lake Resources, which is listed on the Australian Securities Exchange, is developing a lithium production plant in Argentina. There, instead of using the usual evaporation method, it uses technology developed by Lilac Solutions, an American company backed by Bill Gates, to extract lithium directly from brine.
It plans to produce 50,000 tonnes of lithium carbonate annually by 2025, creating a supply chain that can bypass China.
Lake Resources' Argentina plant, which was completed in 2015, has yet to produce lithium carbonate. Crowe said it takes time to develop lithium projects, which automakers don't fully take into account when setting production targets for electric vehicles.
"This year's lithium supply gap is expected to range from 50,000 tons to 400,000 tons per year, while the annual supply is about 450,000 tons," he said. Rumor has it that two very large battery manufacturers in the market want to purchase 150,000 tons of lithium hydroxide this year. At a supply of 450,000 tons, this is not possible. ”
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The U.S. wants to account for half of electric vehicle sales by 2030, and the European Union has proposed a complete ban on sales of cars with internal combustion engines by 2035. Major brands such as Volkswagen, Ford, Stellantis, GM and Toyota have all set targets and expressed their determination to increase the production of electric vehicles and phase out fuel vehicles.
The International Energy Agency estimates that global electric vehicle sales must reach 47 million vehicles per year by 2030 to ensure that transport emissions meet a "sustainable development scenario." As a result, global warming would be much lower than the 2 degrees Celsius set out in the Paris climate agreement.
Rio Tinto predicts that demand for lithium will grow at an annual rate of 25%-35% over the next decade.
Barrenjoey's Morgan said the target of 47 million electric vehicles a year is less practical. The reality is that by 2030, annual sales of electric vehicles can reach 28 million. But even so, the lithium mines currently announced will not be able to support this goal, and there will be a 6 times higher lithium supply than it is now.
"With 8 years to go until 2030, we need more new lithium mines." "This is a good time to be a miner," he said. ”
This article was originally produced by Automotive Business Review
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