top of page
Writer's pictureIndrabati Lahiri

Battery wars: China and Australia eye biggest lithium deposits


In 2012, the global mine production of lithium was only about 35,000 metric tons. Ten years later, the surge in items requiring lithium, ranging from smartphones to e-cigarettes and electric cars caused worldwide lithium carbonate output to shoot to 668,000 metric tons, according to S&P Global. Continuing on this same trend, lithium carbonate demand is expected to hit about 856,000 metric tons in 2023.


As a result, several countries are now fighting for control over both current and undiscovered lithium reserves.


China and Australia have competed fiercely over lithium deposits scattered over the world, especially in areas and countries with volatile governments, such as the Democratic Republic of Congo. This may lead to increased risks of over-mining and exploitation, as these countries, although highly mineral-rich, don’t always have the infrastructure and laws in place to prevent this.


Who are the major lithium players?


Chile has traditionally been the largest lithium producing country, however, in 2021, Australia overtook it, producing about 55,000 metric tons of lithium. Most of these deposits are in the Yilgarn Craton, in the Greenbushes Lithium Operations.


Chile, on the other hand, produced about 26,000 metric tons of the metal, approximately one quarter of total global production in 2021. The majority of these deposits are located in the Atacama desert salt flats, however, reserves are quickly being depleted.


Mining in the Atacama desert also brings a host of other issues with it, such as low water supply, environmental impact in an ecologically delicate area and continuing protests from local communities.


China is the third largest producer, at about 14,000 metric tons, mostly located in the Sichuan province. With the country also having the most electric vehicles in use, as of 2019, being a lithium producer greatly reduces supply lags. This is a major reason for the country wanting to expand its lithium resources in the near future.


Argentina is also a major lithium producer, standing at about 6,200 metric tons in 2021, along with Zimbabwe at 1,200 tons. However, other countries, such as the Democratic Republic of Congo have huge amounts of as yet undiscovered lithium reserves, which may soon put it on the global lithium map, to compete better with other countries.


Why are China and Australia battling it out for lithium deposits?


AVZ Minerals, a premier Australian mining company, is currently fighting to remain in control of one of the largest deposits of lithium in the world, located in the Manoco region of the Democratic Republic of Congo. The DRC is already heavily mineral rich with most of the minerals likely to be key to the fourth industrial revolution, led by the rise of electric vehicles, robotics, artificial intelligence.


Estimates point towards the country having about 1.5 billion or even more tons of lithium in total, out of which about 400 million has already been found. Most of these reserves are located in Manoco, a previous tin hub.


AVZ Minerals has already established itself in the region, with a joint venture with Cominiere, a Congolese company. It has already carried out diamond mining and is now looking to invest in lithium as well. The company plans to set up a plant worth approximately $600 million, which will handle everything from mining to processing.


However, AVZ Minerals now has to contend with a number of Chinese mining companies and investors laying a claim to this deposit as well. This is mostly led by Zijin Mining, which has already led AVZ Minerals to voluntary halt the trading of its shares on the key Australian Stock Exchange.


Now, with a coalition of influential battery manufacturers, AVZ Minerals could be left with a mere 36% stake in the Manoco deposit, down from the lion’s share of 75% it commanded earlier.


CATH Energy Technologies, a Chinese lithium miner, also has a significant stake in the matter, having previously agreed to purchase a 24% stake in the deposit, worth approximately $240 million. The company has now also joined hands with Zijin Mining, leaving AVZ Minerals in the dust.


This is not the first time that China has shown considerable interest in gaining control of lithium and other rare mineral reserves across the world. A similar move was deployed in Afghanistan, after the recent collapse of the country to the Taliban, where China eyed the country’s significant lithium reserves, under the guise of helping rebuild it.


In the DRC case, China stands to gain a lot from taking control of the Manoco mine, as it is already a major producer of electric vehicles, which drives most of the lithium demand. It is also currently the largest car market overall in the world and has an enviable global dominance in rare and critical materials. Gaining control over the DRC reserves would go a long way in furthering that agenda.


On the other hand, Australia is also a major lithium producer, and has a decent number of electric vehicles as well, with more than 40,000 EVs being sold since 2011. However, although the country has significant lithium deposits itself, it is constantly in battle with environmentalists and tightening climate laws, which prevent and regulate a lot of mining activity.


In this regard, moving the lithium mining base elsewhere, to a country which does not have such stringent mining and environmental laws could be seen as an opportunity to cash in on the lithium rush and go a long way in helping establish Australia’s dominance in this area.


How will the rise of electric vehicles (EVs) affect lithium?


With the rise of electric vehicles (EVs) and them accounting for more than 9% of the total car market now, according to the International Energy Agency (IEA) lithium is set to explode in the next few decades. This is because along with other metals such as copper, nickel and cobalt, lithium is key for electric vehicle batteries, allowing for greater performance and increased battery life.


General Motors has already announced that it plans to phase out the sales for diesel and petrol cars by 2033, with several other auto manufacturers likely to follow in its footsteps soon.


This is likely to usher in greater international competition for lithium deposits for EVs, as well as lead to supply chain blockages, especially in the US, which imported over 90% of its lithium from Argentina from 2016 to 2019, according to Energy.gov.


In 2021, US lithium imports accounted for about 2500 metric tons. If supply chain and logistics issues get worse, the roll-out of affordable electric vehicles could possibly be delayed further.


Companies such as Tesla, therefore, have already decided to get ahead of the curve and have acquired the rights to mine their own lithium in Nevada, which may greatly cut down on supply times and costs. A number of other electric vehicle manufacturers may soon decide to follow this example, however, it may not be available to all of them, due to costs and mining licence issues.


The rise of EVs also pose two significant issues- that of overexploitation and properly recycling lithium batteries. As of now, lithium is still considered a scarce material, which means that it is still in danger of being mined too much and too fast.


This also makes it crucial to recycle batteries, instead of constantly mining more lithium for new ones. Mining activities also have a sizeable environmental and social impact on the communities in which they operate.


However, this is an uphill struggle for most companies still, as the costs of recycling currently still outweigh the cost of new batteries. But all is not lost yet- a number of companies are leading impressive efforts in order to reduce the scarce materials used for batteries. This will also go a long way in helping reduce the toxic wastage that arises from the high dumping of lithium batteries which are not recycled.

17 views0 comments

Comments


bottom of page