China strengthens grip on lithium supplies crucial to electric cars

CHINA is tightening its control of the electric vehicle battery market as it deepens its investment into African lithium mines.

Beijing is forecast to control almost a third (32pc) of global lithium supply by the middle of the decade, according to analysts at UBS, compared with 24pc currently. Much of the rise will come from Chinese bankrolled projects in countries such as Mali and Zimbabwe.

Lithium is a crucial component in electric vehicle batteries and demand for the metal is set to soar as petrol and diesel cars are phased out.

China has long been a dominant force in battery metals and is already home to more than 75pc of the world’s cobalt refining capacity and 59pc of the world’s lithium refining capacity.

Analysts at UBS estimate that Chinese-controlled supply of lithium may grow from 194,000 tons last year to roughly 705,000 tons by 2025. Part of this will come from projects in China mining lepidolite – a type of lithiumbearing rock – that are relatively quick to develop. UBS estimates China’s lepidolite will rise from 88,000 tons last year to about 280,000 ton by 2025.

However, recent investment in African projects is also expected to trigger rapid growth in supply.

“We are watching a number of key projects that we have higher conviction [in],” the analysts wrote in a recent note. These include the Arcadia lithium project near Harare, Zimbabwe, which was bought by Zhejiang Huayou Cobalt for $422m (£348m) last December. Ganfeng Lithium, another Chinese business, bought a $130m stake in the Goulamina lithium mine in Mali in 2021, which is scheduled to start shipping products towards the end of this year.

Chinese-backed projects in Africa produced about 3,000 ton of the metal last year but this is on course to rise to 160,000 tons by 2025.

China’s dominance of the battery industry has triggered alarm in the West as tensions between Beijing and Washington rise. The US is trying to push through trade rules aimed at breaking China’s stranglehold over the battery metals market.

The proposals stipulate that a large portion of the critical metals in an electric car battery must come from the US or one of its Free Trade Agreement partners in order to qualify for subsidies.

Senator Joe Manchin said last year that carmakers should “get aggressive and make sure that we’re extracting in North America, we’re processing in North America”.