How the U.S. Is Investing Billions to Compete With China’s Lithium Supply Chain | WSJ U.S. vs. China

Lithium is a lightweight metal and crucial component in batteries, particularly for electric vehicles (EVs) and renewable energy technologies.
Described as "the white gold of the electric age" due to its significance in the transition to green energy.

Global demand for lithium is projected to reach nearly 2.5 million metric tons by 2028.
Lithium's value stems from its essential role in achieving climate goals and electrifying the world.

China dominates the global lithium market, controlling 55% of lithium processing.
This substantial control requires China to secure raw lithium from international sources, often making investments in lithium mines abroad.
As part of its strategy, China aims to control one-third of the world's raw lithium supply.
China's electric vehicle industry accounts for about 60% of global electric car sales, increasing its need for a reliable lithium supply chain.

Lithium must be processed in refineries to convert lithium compounds into battery components.
China, as the world's top lithium processor, processes about 55% of global raw lithium.
Post-processing, lithium can remain in China, travel to Japan, or South Korea to be made into battery components, which are then shipped globally, including to the US.

The United States processes very limited amounts of lithium domestically and relies heavily on China's processing capabilities.
China invested heavily in domestic lithium refineries in the 2000s, leading to its current processing dominance.

The demand for lithium has led to significant increases in prices, with prices reportedly 300% higher in August 2021 than at the start of the year.
Local governments are witnessing enormous bidding wars for mining rights, with one auction in Sichuan attracting over 11,000 bids.
Specific examples include the Jiada Lithium Mine auction, which closed at $580 million—1300 times its opening price.

Most lithium mining occurs outside of China, notably in Latin America and Australia, posing supply chain vulnerabilities for Chinese companies.
China's limited domestic lithium mining capacity requires reliance on foreign supplies.

Trade relations complicate access; Australia, for instance, blocked a Chinese company's mine purchase due to national security concerns.
Canada has similarly mandated the divestiture of Chinese holdings in lithium mines.
Chinese investments in African and Latin American lithium mines have reached $4.5 billion over two years, but these ventures come with substantial risks tied to regional political instability and underdeveloped infrastructure.

Developing nations like Zimbabwe are implementing stricter controls over raw lithium, including bans on export to ensure local processing.
Countries such as Chile and Bolivia are discussing forming a lithium cartel, which complicates external investment.

Some experts maintain that Chinese investments in these regions may stabilize supply chains, as China provides consistent demand.
China's reliability as a customer is appealing to resource-rich countries seeking stable revenue, despite potentially lower prices.

Lithium mining in the US declined in the 20th century as cheaper extraction methods were established in South America.
The US is now attempting to re-establish its supply chains to reduce reliance on Chinese imports.

The Inflation Reduction Act incentivizes lithium production in the US through tax credits and subsidies, potentially reducing production costs by 10%.
Exxon Mobil is planning to enter the lithium market by constructing a significant processing facility in Arkansas, projected to generate between 75,000 to 100,000 metric tons annually—this is expected to comprise about 15% of global finished lithium products.

Lithium Americas is progressing with the Thacker Pass mine, which has been in planning for 16 years and is the only project in North America currently permitted for construction, expecting another three years until completion.

Lithium is a critical metal for technologies needed for the decarbonization of global economies.
The global competition for lithium emphasizes its importance for countries aiming to leverage renewable energy and grow electric vehicle markets.