When the world can’t ‘detox’ China’s lithium

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2022-07-14 06:41:55

The industrial port of Kwinana on Australia’s west coast is a microcosm of the global energy industry. Since 1955 it has housed one of the largest oil refineries in the region, owned by British Petroleum when it was still the Anglo-Persian Oil Company. It used to provide 70% of Western Australia’s fuel supply, but in March 2021 the plant closed.

But when one old story ends, a new chapter of the next one opens. Oil has ceased to be the protagonist, replaced by lithium. Australia is also home to nearly half of the world’s lithium supplies. Trucks and machines are noisy once again, but now they are part of a race to secure the clean energy of the future. A race dominated by China.

Over the past 30 years, lithium has become a prized resource. It’s a vital component of the battery – the lifeblood of the phone or laptop you’re using to read these lines. And it will also be the core of the electric vehicles that will soon dominate all roads. But until recently, lithium mined in Australia had to be refined and processed elsewhere. When it comes to lithium processing, China is in a strong position of its own. The superpower will already consume about 40% of the 93,000 tonnes of crude lithium mined globally by 2021. Hundreds of so-called super factories across the country are producing millions of electric vehicle panels for the entire market. domestic market and foreign automakers such as BMW, Volkswagen and Tesla.

According to the estimate of BloombergNEFChina’s lithium-ion battery market share can be up to 80%. Six of the world’s 10 largest electric vehicle battery manufacturers are based in China – one of them, CATL, makes three of the ten globally popular electric vehicle battery lines. That dominance extends through the entire supply chain. Chinese companies have signed preferential agreements with lithium-rich countries and benefited from their huge investment in conducting the complex steps between mining and production. That is worrying the rest of the world, and both the US and Europe are trying to get rid of China’s lithium at all costs before it’s too late.

An electric car requires between 30 and 60 kilograms of lithium. They estimate that by 2034, the US alone will need 500,000 tons of unrefined lithium per year to produce electric vehicles. This is more than the global supply in 2020. Some experts fear that the oil crisis caused by the Russia-Ukraine crisis, as well as the outbreak of geopolitical tensions, will turn everything. into a punitive war between the parties. Such a scenario could lead to China stopping battery supplies to Western carmakers, making the transition to electric vehicles difficult.

“If China decides to focus on the domestic market, lithium-ion batteries will be more expensive outside of China.”, said Andrew Barron, professor of low-carbon energy and the environment at Swansea University. And according to him, Western efforts to expand battery production capacity are becoming “more urgent than ever”.

Those efforts are taking shape, albeit slowly. If everything goes according to plan, there will be 13 new super factories in the US by 2025, and more 35 in Europe by 2035. That would be a difficult goal to achieve. because many projects are plagued by logistical problems, protests and environmental problems.

But those super factories will need lithium, in huge quantities. In March, the US President announced plans to use the Defense Production Act to finance domestic mining of lithium and other key battery materials under the auspices of national security. Across the Atlantic, the European Union is moving forward regulation to try to create a green battery supply chain in Europe, with a focus on lithium recycling.

But there is an important part missing between mining and production. Turning lithium ore into pure lithium carbonate or lithium hydroxide to make batteries is a complex and very expensive operation. It takes years to complete a lithium processing plant or an entire mega-factory, and can take decades for the money. estimate about $175 billion for the US to catch up with China. This East Asian country is control at least two-thirds of the world’s lithium processing capacity and this could allow them to strangle the entire battery market in their hands for years to come.

Without urgent investment at this in-between transition, lithium extracted from new mines in the US and Europe may still need to be shipped to Asia and back for refining before it can. used in electric cars. That process would increase emissions, affect energy independence and still give China a trump card.

When the world could not 'detox' China's lithium - Photo 2.

The plants in Kwinana were converted from refining oil to refining lithium.

On the surface, Kwinana seems like a step in the right direction. A new lithium processing plant has been built north of the old refinery, and in May it successfully converted a lithium ore called spodumene into battery-usable lithium hydroxide for the first time. But even that does not give Australia the ability to refine and freely sell its own lithium. The plant is a joint venture and its main shareholder is Tianqi Lithium, a Chinese mining and manufacturing company that controls nearly half of the world’s lithium output.

In the global battery supply chain, you will find China everywhere. Tianqi Lithium also owns stakes in SQM, the largest mining company in Chile, and Greenbushes, Australia’s largest lithium mine. Both Tianqi Lithium and Ganfeng Lithium have signed deals across South America’s “lithium triangle,” a mineral-rich region of the Andes at the confluence between Argentina, Bolivia and Chile. And A similar story is happening for other rare earth materials needed for battery production: China controls 70% of the mining industry in the Democratic Republic of the Congo, which produces nearly all of the world’s cobalt, another key component of lithium-ion batteries.

In addition to locking down the global lithium supply, China has also begun to expand domestic production. This country is now third largest lithium producer world behind Australia and Chile, although they hold less than 10% of the world’s supply.

This dominance does not happen overnight. In 2015, China made lithium a national priority as part of its industrial strategy to promote “Manufacturing by 2025”. An estimated $60 billion in government subsidies for electric vehicles helped create a market and the battery supply chain to go with it. Battery companies have invested billions of dollars in domestic lithium sources in a way that is not possible elsewhere in the world.

Lithium projects outside of China have been hit by the market, which is slowly slowing and expanding as the price of lithium rises and falls. But domestic investment in China was mostly flat. As a result, China is the only country that can use lithium from raw materials to finished batteries without depending on imported chemicals or components. ResultThis is mainly because the political climate has emphasized reducing the cost of lithium over maximizing shareholder value.

But China doesn’t produce enough lithium to meet its domestic demand, and besides, only about 10% of the raw material that makes batteries is actually lithium. The country is still dependent on imports of cobalt, nickel, copper and graphite, which has ensured the level of cooperation between the countries so far.

“It’s really an interlocking system.”said Lukasz Bednarski, battery materials analyst. “The Western world and China depend on each other.”

Neither side is interested in starting a trade war, which has led to an impasse that is frustrating for all, according to Barron.. “If China decides not to export any electric vehicle batteries, Western countries may decide not to export nickel to China.”he said. “China doesn’t have the factories to produce the highest purity nickel.”

The balance of power can shift as both sides invest in the goal of energy independence. While the West races to build mines and factories, China is beginning to tap the untapped lithium resources in Xinjiang and the salt lakes of the Tibetan plateau.

When the world could not 'detox' China's lithium - Photo 3.

Lithium is not a very scarce material, but it is still extremely important today.

Ultimately, lithium is not essentially a scarce material. As prices rise, new technologies may become more economically viable – such as a way to extract lithium from seawater or an entirely new chemical battery that does not require lithium. In the short term, however, a supply slowdown could disrupt the transition to electric vehicles in many. Bednarski says: “There could be hiccups, with years of soaring raw material prices and temporary shortfalls in the market.”

Chinese automakers will have a huge advantage if that happens. Currently, Chinese brands like Nio and Chinese-owned European brands like MG are roll out electric cars in the West with the cheapest price on the market. Barron says: “Western companies owned by China will have a big advantage over their competitors in Europe or the US.”

Once operational, the lithium plant in Kwinana will ship 24,000 tonnes of Australian lithium hydroxide per year. But that lithium, mined in Australia to make batteries made in South Korea and Sweden and for electric vehicles sold in Europe and the US, will depend on China at every step of the refining process. Shell of the old refinery will remain, as a monument to the centuries-old competition for fossil fuels that once reshaped the world. But within it there is a new race going on, and China is in the lead.

Refer Wired

#world #detox #Chinas #lithium

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