China and its obsession with lithium: the struggle of the Asian giant to ensure the supply of “white gold”

FILE PHOTO: Brine pools used to extract lithium are seen next to a mining camp in Salar del Rincon, in Salta, Argentina August 12, 2021. Picture taken August 12, 2021. REUTERS/Agustin Marcarian

China wants to control global lithium production. This for the Asian giant goes far beyond the economic (although its officials say otherwise), since by controlling the mineral reserves its political power and hegemony would be much greater.. And it is that the value of the metal has skyrocketed in the last year, the price in the Chinese market reached 315,000 dollars per ton for the first time.

Recently, Argentine President Alberto Fernández signed his country up for the Belt and Road Initiative during his trip to Beijing. The Argentine president’s announcement generated discomfort in Washington and other Western countries, which promised to cut off all dependence on lithium produced by the Asian giant.

The South American country is located in the South American Lithium Triangle (along with Chila and Bolivia), which contains more than half of the world’s reserves. China, which is the largest buyer and investor in the metal’s mines, needs to control or have influence in the parts of the world where it is mined.

With climate change and the need to transition from fossil fuels to renewable energy, the silvery-white alkali metal is referred to as “the new oil” or “white gold”a essential material used in electric vehicle batteries, reported The South China Morning Post

Beijing assures that the search for lithium outside its country is not based on geopolitical interests but on market demands, the Chinese newspaper reported.

Lithium ion battery.  (photo: The Mail)
Lithium ion battery. (photo: The Mail)

Estimates from the International Energy Agency project that global demand for lithium will increase by more than 4,000% by 2040.

These trends indicate that the control of the lithium industry could generate great benefits in the future, which is likely to increase the geopolitical dispute between the great powers.“, said to The South China Morning Post Ryan Berg, a fellow at the Washington-based Center for Strategic and International Studies.

“Capacity revolves around key sources like Chile and China, meaning simmering trade tensions between China and the US are coming into play,” Panjiva Research wrote in a Feb. 9 note.

Both Washington and Beijing have lithium at the center of their interests, they know how essential control of the mineral is for their economies. For this reason, Joe Biden ordered a supply chain review arguing that China’s dominance “presents a critical vulnerability to the future of the US domestic auto industry.”

“The high-capacity battery market is arguably one of the most critical to our nation’s interests,” says a White House report.

China, in particular, has created a distorted supply chain landscape through government or non-market intervention by state-controlled companies.both nationally and in developing economies,” the report adds.

File aerial image of the brine pools at SQM's lithium mine in the Atacama desert, Chile.  January 10, 2013. REUTERS/Ivan Alvarado
File aerial image of the brine pools at SQM’s lithium mine in the Atacama desert, Chile. January 10, 2013. REUTERS/Ivan Alvarado (Ivan Alvarado/)

A Chinese government researcher and adviser, who spoke on condition of anonymity to The South China Morning Post said competition for resources like lithium should take place between multinational companies rather than governments.

I do not like to exaggerate it to the level of national strategic competition“, said. “Although it is inevitable that competition in the market may encounter some political obstacles, in the long run, the supply of energy resources is more of a business and [se basa en] the behavior of the market”, he added.

Given the demand for batteries in China, driven by the automotive industry, companies in the Asian giant need to have a permanent and reliable supply of lithium. And for Beijing, Latin America is the place of interest, since there are the largest reserves of the mineral.

Lithium is a strategic resource; it certainly has something to do with the relationship between two countries”, Xu Shicheng, a researcher in Latin American studies at the Chinese Academy of Social Sciences, told the Chinese newspaper.

Keep reading:

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